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Summary

  • SNDX is a late-stage biopharmaceutical company focused on the development and commercialization an epigenetic therapy for treatment-resistant cancers.
  • The lead product candidate, Entinostat, was recently granted Breakthrough Therapy designation by the U.S. Food and Drug Administration.
  • SNDX's price-to-book is 2.8, relatively low.

Based in Waltham, MA, Syndax Pharmaceuticals (NASDAQ:SNDX) scheduled a $60 million IPO on the Nasdaq with a market capitalization of $171 million at a price range midpoint of $14 for Thursday, June 19, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents

Manager, Joint managers: Deutsche Bank Securities/ Jefferies

Co-Managers: JMP Securities/ Wedbush PacGrow Life Sciences

End of lockup (180 days): Tuesday, December 16, 2014

End of 25-day quiet period: Monday, July 14, 2014

Summary

SNDX is a late-stage biopharmaceutical company focused on the development and commercialization of its lead product candidate, entinostat, an epigenetic therapy for treatment-resistant cancers.

Valuation

Glossary

Valuation Ratios

Mrkt Cap

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing Q1 '14

Syndax Pharmaceuticals

$171

no rev

-10.7

2.8

2.8

35%

Conclusion

The rating on SNDX is neutral.

The lead product, Entinostat, was recently granted Breakthrough Therapy designation by the U.S. Food and Drug Administration. SNDX's price-to-book is 2.8, relatively low.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

Business

SNDX is a late-stage biopharmaceutical company focused on the development and commercialization of its lead product candidate, entinostat, an epigenetic therapy for treatment-resistant cancers.

Breakthrough therapy designation

Entinostat was recently granted Breakthrough Therapy designation by the U.S. Food and Drug Administration, or FDA, based on data from SNDX's completed randomized Phase 2b clinical trial in estrogen receptor positive, or ER+, locally recurrent or metastatic breast cancer.

This trial showed statistically significant improvement in the primary endpoint of progression-free survival, or PFS, and showed statistically significant improvement in overall survival, an exploratory endpoint.

National Cancer Institute collaborators

SNDX and its collaborators at the National Cancer Institute, or NCI, will evaluate entinostat in a pivotal Phase 3 clinical trial in hormone receptor, or HR, positive locally advanced or metastatic breast cancer, which SNDX refers to as advanced breast cancer.

Phase 3 clinical trial

The Phase 3 clinical trial will be conducted by the Eastern Cooperative Oncology Group - American College of Radiology Imaging Network Cancer Research Group, or ECOG-ACRIN, under sponsorship and funding support from the NCI.

SNDX is supporting the Phase 3 clinical trial under a Cooperative Research and Development Agreement, or CRADA, with the NCI and a separate agreement with ECOG-ACRIN.

The protocol for the Phase 3 clinical trial was reviewed and agreed upon by the FDA under a Special Protocol Assessment, or SPA, agreement with the NCI in January 2014. ECOG-ACRIN activated the trial in March 2014 and SNDX expects patient enrollment to begin in the second quarter of 2014.

Phase 2 clinical trial

To further enhance its breast cancer program, SNDX intends to conduct a Phase 2 clinical trial to further study the association between a potential biomarker of entinostat activity and clinical outcome, which SNDX identified in its previous trial, and to explore entinostat's use with another hormonal therapy.

Additional investigator- and NCI-sponsored trials are being conducted to provide Phase 2 proof-of-concept data for entinostat in metastatic lung cancer and other solid and hematologic cancers.

Entinostat well-tolerated

To date, SNDX has efficacy and safety data for entinostat in more than 850 patients.

Entinostat is an oral, weekly or bi-weekly, selective histone deacetylase, or HDAC, inhibitor that has been well-tolerated in clinical trials to date.

Selective histone deacetylase, or HDAC

HDACs are a class of enzymes with a predominant role in regulating gene expression through a chemical modification to DNA-associated proteins known as histones.

This chemical modification is part of a regulatory system that controls gene expression, known as epigenetics.

When the function of these epigenetic enzymes is altered, gene expression is changed in ways that often leads to disease.

For example, specific HDACs are over-expressed in cancer cells, leading to improper gene regulation, which results in uncontrolled cell growth and resistance to cancer therapies.

Based upon its preclinical results, SNDX believes entinostat is a potent inhibitor of these cancer-relevant HDACs, thereby restoring normal gene expression and protein function to slow cancer growth and turn off activated cancer therapy resistance pathways.

SNDX believes entinostat is differentiated through its selectivity for cancer-relevant HDACs and clinical activity profile, including convenient oral dosing and long half-life.

Dividend Policy

No dividends are planned.

Intellectual Property

As of June 5, 2014, SNDX's portfolio included three owned pending U.S. non-provisional patent applications and one owned Patent Cooperation Treaty, or PCT, application.

SNDX has filed national phase applications in the Eurasia Regional Patent Office, Ukraine and Georgia.

SNDX has assigned its rights to the application SNDX filed in the Eurasia Regional Patent Office to Domain Russia Investments Limited, or DRI.

SNDX has also assigned its rights to the applications SNDX filed in Ukraine and Georgia to NovaMedica LLC, or NovaMedica.

SNDX has also filed national phase applications in the United States, Canada, Japan, Brazil and Mexico based on its owned PCT application.

Competition

There are numerous approved therapies for treating breast and lung cancers. Many of these approved drugs are well-established therapies or products and are widely accepted by physicians, patients and third-party payors.

Some of these drugs are branded and subject to patent protection, and others are available on a generic basis. Insurers and other third-party payors may encourage the use of generic products or specific branded products.

SNDX expects that if entinostat is approved, it will be priced at a significant premium over competitive generic products.

This pricing premium may make it difficult for SNDX to differentiate entinostat from currently approved therapies and impede adoption of the product, which may adversely impact SNDX's business strategy.

In addition, many companies are developing new therapeutics, and SNDX cannot predict what the standard of care will be as entinostat continues in clinical development.

If entinostat in combination with exemestane were approved for the treatment of HR-positive locally advanced or metastatic breast cancer, it would face competition from currently approved and marketed products, such as everolimus.

Further competition could arise from products currently in development, including Pfizer Inc.'s palbociclib, which is currently in Phase 3 clinical testing in first-line HR-positive locally advanced or metastatic breast cancer, and Novartis Oncology Global's buparlisib, which is currently in Phase 3 clinical testing in HR-positive locally advanced or metastatic breast cancer.

5% stockholders

Entities affiliated with Domain Associates 34.3%

Entities affiliated with MPM Capital 29.4%

Entities affiliated with Forward Ventures 8.2%

Eddingpharm 5.7%

RMI Investments 13.2%

Use of proceeds

SNDX expects to net $52 million from its IPO. Proceeds are allocated as follows:

$11.8 million to support the Phase 3 clinical trial of entinostat in HR-positive locally advanced or metastatic breast cancer to the primary endpoint of PFS data;

$10.3 million to fund the Phase 2 biomarker and efficacy clinical trial of entinostat in HR-positive locally advanced or metastatic breast cancer;

$7.7 million to conduct activities to support the filing of an NDA, including manufacturing of registration batches of active pharmaceutical ingredient and final drug product; and

the remainder for working capital and general corporate purposes.

Disclaimer: This SNDX IPO report is based on a reading and analysis of SNDX's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: Syndax Pharmaceuticals