Syndax Pharmaceuticals
Annual Report 2016

Plain-text annual report

SYNDAX PHARMACEUTICALS INC FORM 10-K (Annual Report) Filed 03/14/17 for the Period Ending 12/31/16 Address Telephone CIK Symbol SIC Code Industry 400 TOTTEN POND ROAD SUITE 110 WALTHAM, MA 02451 781-419-1400 0001395937 SNDX 2834 - Pharmaceutical Preparations Pharmaceuticals Sector Healthcare Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2017, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K (Mark One) ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended December 31, 2016OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Transition Period from to Commission File Number: 001-37708 Syndax Pharmaceuticals, Inc.(Exact name of Registrant as specified in its charter) Delaware 2834 32-0162505(State or Other Jurisdiction ofIncorporation or Organization) (Primary Standard IndustrialClassification Code Number) (I.R.S. EmployerIdentification Number)35 Gatehouse Drive, Building D, Floor 3Waltham, Massachusetts 02451(781) 419-1400(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, par value $0.0001 per share NASDAQ Global Select MarketSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Act. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and postedpursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of the registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer ☐ Accelerated Filer ☐Non-accelerated Filer ☒ (Do not check if a smaller reporting company) Smaller Reporting Company ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒As of June 30, 2016, the last day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the Common Stock held by non-affiliates of the registrantwas approximately $109.6 million, based on the closing price of the registrant’s common stock on June 30, 2016. Shares of the registrant’s common stock held by each officer and director andeach person known to the registrant to own 10% or more of the outstanding common stock of the registrant have been excluded in that such persons may be deemed affiliates. This determinationof affiliate status is not a determination for other purposes.As of March 7, 2017, there were 18,244,423 shares of common stock outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive proxy statement for its 2017 Annual Meeting of Stockholders, which the registrant intends to file pursuant to Regulation 14A with the Securities andExchange Commission not later than 120 days after the registrant’s fiscal year ended December 31, 2016, are incorporated by reference into Part III of this Annual Report on Form 10-K. Table of ContentsTABLE OF CONTENTS Page SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS ii PART I Item 1. Business 1 Item 1A. Risk Factors 43 Item 1B. Unresolved Staff Comments 75 Item 2. Properties 75 Item 3. Legal Proceedings 75 Item 4. Mine Safety Disclosures 75 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuers Purchases of Equity Securities 76 Item 6. Selected Financial Data 78 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 79 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 93 Item 8. Financial Statements and Supplementary Data 93 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 93 Item 9A. Controls and Procedures 93 Item 9B. Other Information 94 PART III Item 10. Directors, Executive Officers and Corporate Governance 95 Item 11. Executive Compensation 95 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 95 Item 13. Certain Relationships and Related Transactions, and Director Independence 95 Item 14. Principal Accountant Fees and Services 95 PART IV Item 15. Exhibits and Financial Statement Schedules 95 Item 16. Form 10-K Summary 95 iTable of ContentsSPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” forpurposes of this Annual Report on Form 10-K. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “could,”“estimate,” “expects,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative or plural of those terms, and similarexpressions.Forward-looking statements include, but are not limited to, statements about: • our estimates regarding our expenses, future revenues, anticipated capital requirements and our needs for additional financing; • the timing of the progress and receipt of data from the Phase 1b/2 clinical trials of entinostat in lung cancer, melanoma, ovarian cancer and triplenegative breast cancer; • the timing of the progress and receipt of data from the Phase 3 clinical trial of entinostat in advanced HR+, HER2- breast cancer; • the timing of the progress and receipt of data from the Phase 1 clinical trial of SNDX-6352 and the potential use of SNDX-6352 to treat various cancerindications; • the scope, timing of the commencement, progress and receipt of data from any other clinical trials that we and our collaborators may conduct; • our ability to replicate results in future clinical trials; • our expectations regarding the potential safety, efficacy or clinical utility of our product candidates; • our ability to obtain and maintain regulatory approval for our product candidates and the timing or likelihood of regulatory filings and approvals forsuch candidates; • the potential use of entinostat to treat additional tumor types, including head and neck, bladder and renal cells; • our ability to maintain our licenses with Bayer Pharma AG, Kyowa Hakko Kirin Co., Ltd. and UCB Biopharma Sprl; • the potential milestone and royalty payments under certain of our license agreements; • the implementation of our strategic plans for our business and development of our product candidates; • the scope of protection we establish and maintain for intellectual property rights covering our product candidates and our technology; • the market adoption of our product candidates by physicians and patients; and • developments relating to our competitors and our industry.Factors that may cause actual results to differ materially from current expectations include, among other things, those set forth in Part I, Item 1A, “RiskFactors,” below and for the reasons described elsewhere in this Annual Report on Form 10-K. Any forward-looking statement in this Annual Report on Form 10-Kreflects our current view with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results ofoperations, industry and future growth. Given these uncertainties, you should not rely on these forward-looking statements as predictions of future events. Althoughwe believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance orachievements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new informationbecomes available in the future. iiTable of ContentsThis Annual Report on Form 10-K also contains estimates, projections and other information concerning our industry, our business and the markets forcertain drugs and consumer products, including data regarding the estimated size of those markets, their projected growth rates and the incidence of certain medicalconditions. Information that is based on estimates, forecasts, projections or similar methodologies is inherently subject to uncertainties and actual events orcircumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained these industry,business, market and other data from reports, research surveys, studies and similar data prepared by third parties, industry, medical and general publications,government data and similar sources and we have not independently verified the data from third party sources. In some cases, we do not expressly refer to thesources from which these data are derived.In this Annual Report on Form 10-K, unless otherwise stated or as the context otherwise requires, references to “Syndax,” “the Company,” “we,” “us,” “our”and similar references refer to Syndax Pharmaceuticals, Inc. and its wholly owned subsidiaries. This Annual Report on Form 10-K also contains references to ourtrademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to, including logos, artwork and other visualdisplays, may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that their respective owners will not assert, to thefullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationshipwith, or endorsement or sponsorship of us by, any other companies. iiiTable of ContentsPART IItem 1. BUSINESSWe are a clinical stage biopharmaceutical company developing an innovative pipeline of combination therapies in multiple cancer indications. Our leadproduct candidate, entinostat, is currently being evaluated in a Phase 3 clinical trial for advanced hormone receptor positive, or HR+, human epidermal growthfactor receptor 2 negative, or HER2-, breast cancer. Entinostat was granted Breakthrough Therapy designation by the U.S. Food and Drug Administration, or theFDA, following positive results from our Phase 2b clinical trial, ENCORE 301. We are developing entinostat, which has direct effects on both cancer cells andimmune regulatory cells, and SNDX-6352, a monoclonal antibody that targets the colony stimulating factor-1 receptor, or CSF-1R, to enhance the body’s immuneresponse on tumors that have shown sensitivity to immunotherapy. We acquired the exclusive rights to SNDX-6352 in July 2016 and are evaluating entinostat as acombination therapeutic in Phase 1b/2 clinical trials with Merck & Co., Inc., or Merck, for non-small cell lung cancer and melanoma; with Genentech, Inc., orGenentech, for triple negative breast cancer, or TNBC; and with Merck KGaA, Darmstadt, Germany, or Merck KGaA, and Pfizer Inc., or Pfizer, for ovarian cancer.We are evaluating SNDX-6352 in a single ascending dose Phase 1 clinical trial. We plan to continue to leverage the technical and business expertise of ourmanagement team and scientific collaborators to license, acquire and develop additional cancer therapies to expand our pipeline.EntinostatEntinostat is our oral, small molecule product candidate that has direct effects on both cancer cells and immune regulatory cells, potentially enhancing thebody’s immune response to tumors. The favorable safety profile of entinostat has been demonstrated in clinical trials in more than 1,000 cancer patients. Webelieve that, based on its mechanism of action, entinostat may have broad applications in additional tumor types, including head and neck, bladder and renal cell,which are immuno-responsive, or sensitive to immunotherapy.Immuno-oncology is an emerging field of cancer medicine that has focused on the development of therapeutic approaches designed to activate the immunesystem to find and destroy cancer cells. Many tumors have the ability to evade the immune system through direct cellular interactions and recruitment of immuno-suppressive cells to the area surrounding the tumor. One such evasion mechanism is through the expression of proteins known as checkpoint proteins, such asprogrammed cell death protein ligand 1, or PD-L1, on the cancer cell surface. These checkpoint proteins bind to a corresponding receptor known as programmedcell death protein 1, or PD-1, which is expressed on particular immune cells known as cytotoxic T cells. Through this binding process, cytotoxic T cells are blockedfrom killing cancer cells. Antibodies known as immune checkpoint inhibitors block the interaction between PD-1 and PD-L1 to restore the ability of cytotoxic Tcells to kill cancer cells and have shown significant clinical benefit in treating certain cancers. We believe that entinostat acts on a different tumor-evasionmechanism than is targeted by most other immunotherapies in development. Instead of focusing on the interaction between the T cell and the tumor, entinostat hasbeen observed to decrease the population of immuno-suppressive cells known as myeloid-derived suppressor cells, or MDSCs, and regulatory T cells, or Tregs,which localize in the area surrounding the tumor and block T cells from killing cancer cells.We believe entinostat, a Class 1-specific histone deacetylase, or HDAC, inhibitor, is the therapy most advanced in development that can directly reduce boththe number and activity of MDSCs and Tregs while sparing the cytotoxic T cells. Through blocking the immuno-suppressive effects of MDSCs and Tregs, webelieve entinostat has the potential to be used synergistically with therapies such as immune checkpoint inhibitors, resulting in the increased ability of the T cells toattack the tumor. Through this important effect on MDSCs and Tregs, entinostat has the potential to be used synergistically with therapies working to stimulate theimmune system. The long half-life of entinostat allows for continuous exposure to therapy potentially resulting in positive immuno-modulatory effects withoutcorresponding cytotoxic effects. Another benefit of entinostat’s long half-life is the potential to minimize the frequency of dosing and reduce the severity andfrequency of adverse events. 1Table of ContentsSNDX-6352SNDX-6352 is a humanized monoclonal antibody that binds with high affinity to CSF-1R. CSF-1R is expressed on the surface of specific immuno-suppressive cells (e.g., tumor-associated macrophages or TAMs) known to play a role in the growth, survival, and metastases of cancer. Inhibition of CSF-1R isthought to disrupt the activity of TAMs, resulting in a decrease in the immunosuppressive environment immediately surrounding the tumor, or tumor micro-environment. This mode of action is thought to make CSF-1R inhibitors well suited for use in combination with checkpoint inhibitors, particularly in cancers wherethere may be limited activity of immune checkpoint inhibitors as monotherapy.SNDX-6352 is an immunoglobulin G subclass 4, or IgG4, isotype that binds to the ligand binding domain of CSF-1R, blocking the binding and consequentactivation by both natural ligands interleukin-34, or IL-34, and colony stimulating factor-1, or CSF-1, and disrupting TAM activity. We believe that the Ig subtypemay provide differentiation in terms of safety and/or efficacy of the antibodies as single agent or in combinations. It is through this mechanism that we believeSNDX-6352 can decrease the ability of the tumor to grow and spread to other parts of the body. We believe that SNDX-6352 has the potential to be used to treat avariety of cancers in combination with entinostat and with other oncology agents, including immune checkpoint inhibitors, radiation, and chemotherapy.Our StrategyWe are focused on developing entinostat and SNDX-6352 to enhance the body’s immune response on tumors that have shown sensitivity to immunotherapy,as well as developing entinostat for use in multiple cancer indications in combination with complementary therapeutic drugs. Key elements of our strategy include: • Establish entinostat as the combination therapy of choice with immune checkpoint inhibitors, initially PD-1 and PD-L1 inhibitors. Our near-term focusis to rapidly establish proof of concept that entinostat can provide additional meaningful clinical benefit to patients in one or more tumor types whencombined with a PD-1 inhibitor or a PD-L1 inhibitor. Our approach is to conduct clinical trials in patients with tumor types that are known to beresponsive to PD-1 or PD-L1 inhibitors, such as NSCLC, melanoma, TNBC, ovarian cancer, head and neck cancer, bladder cancer and renal cellcancer. To that end, we have entered into non-exclusive collaborations with Merck, Genentech, and Merck KGaA and Pfizer. We intend to expand theexisting collaborations or enter into additional collaborations through non-exclusive, clinical development agreements in order to assess entinostat’simpact across multiple tumor types while maintaining our ownership rights. • Pursue regulatory approval of entinostat in indications with significant unmet need and commercial potential. Assuming that one or more of our Phase1b/2 clinical trials are successful, we expect to conduct clinical trials that may lead to accelerated approval and/or conduct pivotal Phase 3 clinicaltrials, which would serve as the basis of approval from the FDA and the European Commission. We may also seek breakthrough therapy designationfrom the FDA depending on the magnitude of the clinical benefit observed. The order in which we choose to pursue FDA approvals will depend on theresults of the entinostat proof-of-concept clinical trials, the relative speed to FDA approval for any given indication, the unmet need that exists withinany given patient population and the competitive landscape of other therapies approved or in development for a given indication. • Develop and obtain regulatory approval for entinostat in combination with hormone therapy in advanced HR+, HER2- breast cancer. Based on thepositive results from our Phase 2b clinical trial, we received breakthrough therapy designation from the FDA for entinostat in combination withAromasin in advanced HR+ breast cancer. We believe that the submission of the results of the Phase 3 clinical trial, if successful, would be sufficientfor regulatory approval of entinostat in the United States. • Develop SNDX-6352 as a single agent and in combination in one or more tumor types. SNDX-6352 inhibits CSF-1R, a cell surface protein thought tocontrol the survival and function of monocytes and macrophages. In many cancers, inhibition of CSF-1R will reduce the number ofimmunosuppressive 2Table of Contents TAMs and enable an immune response against tumors. Our near-term focus is rapidly establishing proof of concept that SNDX-6352 can providemeaningful clinical benefit to patients in one or more tumor types when combined with standard-of-care therapies for a given indication. Wecommenced a single ascending dose Phase 1 clinical trial during the fourth quarter of 2016. We intend to conduct clinical trials in patients with tumortypes having clear unmet needs and where we believe that the inhibition of TAMs via CSF-1R inhibition will synergize with the current standard ofcare, inducing tumor regressions. • Leverage the technical and business expertise of our management team and scientific collaborators to license, acquire and develop additional cancertherapies to expand our pipeline. Our management team, advisors and scientific collaborators are or have been affiliated with some of the world’sleading research and development organizations and have a distinguished track record in product licensing, acquisitions and oncology drugdevelopment. We acquired the exclusive rights to SNDX-6352 in July 2016 and we intend to continue leveraging the collective talent within ourorganization and network of advisors to guide our pipeline expansion and development plans.Clinical Development ProgramsThe following table sets forth information pertaining to our principal clinical trials for (1) entinostat with our initial focus on advancing ENCORE 601,ENCORE 602 and ENCORE 603 in immuno-oncology and (2) entinostat in E2112, our collaboration with ECOG-ACRIN and the NCI, in HR+, HER2- breastcancer and (3) SNDX-6352 in immuno-oncology. (1)Conducted pursuant to an Investigational New Drug, or IND, application, which was filed with the FDA by Syndax Pharmaceuticals, Inc. on April 20, 2015. 3Table of Contents(2)Conducted pursuant to an IND application, which was filed with the FDA by Syndax Pharmaceuticals, Inc. on January 26, 2016.(3)Conducted pursuant to an IND application, which was filed with the FDA by Syndax Pharmaceuticals, Inc. on September 1, 2016.(4)Conducted pursuant to an IND application, which was filed with the FDA by the NCI on October 24, 2013.(5)This trial is in the planning phase and as such an IND has not yet been filed.Cancer is a complex, often fatal, disease arising from uncontrolled cell growth and the ability of cancer cells to avoid the immune system, the body’s primarydefense mechanism for finding and destroying such cells. We are developing entinostat, which has direct effects on both cancer cells and immune regulatory cells.We have demonstrated that the delivery of entinostat in combination with hormone therapy can result in improvements in overall survival in advanced HR+ breastcancer patients. Entinostat has also demonstrated synergistic anti-tumor activity in combination with immune checkpoint inhibitors in preclinical studies. Entinostatis an oral, small molecule HDAC inhibitor. HDACs are enzymes that are subdivided into four classes and are known to play a role in controlling cell survival,proliferation, angiogenesis and immunity. While most HDAC inhibitors broadly inhibit multiple classes of HDACs, preclinical studies have shown that entinostat’sinhibitory activity is selective to Class 1 HDACs, which have been shown to impact the number and activity of MDSCs and Tregs. We believe that entinostat’sClass 1 selectivity enhances immune responses against cancer and is likely to lead to a better tolerability and combinability profile.Entinostat is currently being studied in clinical trials across a broad range of solid tumors, including breast cancer, NSCLC and melanoma. We are workingin collaboration with Merck to study the combination of entinostat with Merck’s immune checkpoint inhibitor, Keytruda ® (pembrolizumab), in a Phase 1b/2clinical trial (ENCORE 601) of up to 158 patients with NSCLC or melanoma. The Phase 1b portion of the clinical trial evaluated the safety and tolerability of thecombination of entinostat and Keytruda and has progressed to the Phase 2 portion of the clinical trial, which is assessing the safety and efficacy of entinostatcombined with Keytruda in patients with either advanced metastatic or recurrent NSCLC or melanoma. Patient enrollment in the Phase 2 portion was initiated inOctober 2016. We have also entered into a collaboration with Genentech, Inc., or Genentech, to evaluate the safety, tolerability and preliminary efficacy ofentinostat in combination with Genentech’s immune checkpoint inhibitor, Tecentriq ® (atezolizumab), in a Phase 1b/2 clinical trial (ENCORE 602) of patients withTNBC. Patient enrollment in the Phase 1b portion was completed in November 2016 and the Phase 2 portion of the trial was opened in December. We have alsoentered into a collaboration with Ares Trading, S.A., a subsidiary of Merck KGaA, Pfizer to evaluate the safety, tolerability and preliminary efficacy of entinostatin combination with the investigational monoclonal antibody targeting PD-L1, avelumab, in a Phase 1b/2 clinical trial, ENCORE 603, of patients with ovariancancer. Avelumab is the proposed international non-proprietary name for the anti-PD-L1 IgG1 monoclonal antibody (MSB0010718C). We initiated ENCORE 603in January 2017 and expect safety data from the Phase 1b safety portion during the first half of 2017. Additionally, entinostat is being evaluated in two ongoing andadditional planned investigator-sponsored clinical trials that are designed to provide further validation of entinostat’s immuno-modulatory activity in various otherimmuno-responsive tumors. We believe that there may be further opportunities through these and additional collaborations to expand the indications in whichentinostat may target immunologic mechanisms of resistance to cancer therapies.Entinostat is also being evaluated in an ongoing Phase 3 clinical trial testing Aromasin in combination with entinostat versus Aromasin in combination with aplacebo in patients with advanced HR+, HER2- breast cancer. ECOG Network Cancer Research Group, or ECOG-ACRIN, is conducting this clinical trial undersponsorship and funding support from the National Cancer Institute, or NCI. We are providing financial and operational support for this Phase 3 clinical trial underseparate agreements with the NCI and ECOG-ACRIN. The protocol for the Phase 3 clinical trial was reviewed and agreed upon by the FDA under a SpecialProtocol Assessment, or SPA, agreement with the NCI. The Phase 3 clinical trial is designed to determine whether the addition of entinostat to Aromasin improvesprogression-free survival, or PFS, overall survival, or both in patients who have previously progressed after treatment with standard-of-care hormonal agents. Webelieve that the submission of 4Table of Contentsthe results of the Phase 3 clinical trial, if successful, would be sufficient for regulatory approval of entinostat in the United States.We are also developing SNDX-6352, which we believe may enhance the body’s immune response on tumors that have shown sensitivity to immunotherapy.With our entinostat program we have identified that many tumors have the ability to evade both the innate and adaptive immune system through direct cellularinteractions and recruitment of immuno-suppressive cells such as MDSCs and Tregs to the area surrounding the tumor. Research has identified a third type ofimmuno-suppressive cell, known as a TAM, that is also recruited to the area surrounding the tumor and, together with MDSCs and Tregs, plays a significant role inhelping a tumor evade detection and elimination by the immune system. TAMs are believed to play at least two key roles in promoting tumor cell growth. The firstis to block the activity of those T cells that mediate the ability of the immune response to kill the tumor cell. The second is to secrete certain growth factors thatinduce the tumor cells to divide. Similar to MDSCs and Tregs, high levels of TAMs have been shown to correlate with poor prognosis for certain cancers andpreclinical studies have demonstrated that inhibition of TAMs can enhance anti-tumor immune responses.Investigation into how TAMs are formed and recruited to the area surrounding the tumor has discovered that TAMs express on their cell surface a receptorknown as CSF-1R that controls their growth. CSF-1R activity is regulated by two molecules, CSF-1 and IL-34, that have been shown by researchers to binddirectly to CSF-1R. Studies show that blocking both CSF-1 and IL-34 may be required in order to fully block signaling through CSF-1R and reduce the number andfunction of TAMs. SNDX-6352 is an IgG4 isotype that binds to the ligand binding domain of CSF-1R, blocking the binding and consequent activation by both IL-34 and CSF-1 and disrupting TAM activity.SNDX-6352 is being evaluated in a single ascending dose Phase 1 clinical trial we commenced in the fourth quarter of 2016. We intend to conduct clinicaltrials in patients with tumor types having clear unmet needs and where we believe that the inhibition of TAMs via CSF-1R inhibition will synergize with thecurrent standard of care, inducing tumor regressions.Immuno-OncologyBackgroundImmuno-oncology is an emerging field of cancer medicine that has focused on the development of therapeutic approaches designed to activate the immunesystem to find and destroy cancer cells. The immune system consists of two parts, the innate immune system and the adaptive immune system and both play a rolein an effective anti-tumor immune response. The innate immune system, composed of key cells such as natural killer cells and neutrophils, is non-specific and isdesigned to rapidly identify and eliminate immediate threats to the body, such as infections and other pathogens. The adaptive immune system, composed of Bcells, T cells and other immune regulatory cells, targets specific antigens and provides a long-term immune response, known as immunologic memory, to antigensit recognizes as foreign.Many tumors have the ability to evade both the innate and adaptive immune system through direct cellular interactions and recruitment of immuno-suppressive cells to the area surrounding the tumor. Cancer cells can express proteins on their cell surface known as checkpoint proteins, such as PD-L1 andprogrammed cell death protein ligand 2, or PD-L2, that block the ability of immune cells known as cytotoxic T cells to kill cancer cells. Antibodies that block PD-L1 or PD-L2 restore the ability of cytotoxic T cells to kill cancer cells and have shown significant clinical benefit. Positive results notwithstanding, durableresponses following treatment with immune checkpoint inhibitors have only been observed in a relatively small population of treated patients, with overall responserates falling below 30% depending on tumor type, and suggest that additional strategies enhancing the anti-tumor immune response are needed to improve thesurvival of cancer patients. 5Table of ContentsResearch to identify the basis for the limited efficacy of recently developed immune therapies has provided investigators with an appreciation for the rolethat specific immune regulatory cells, such as MDSCs and Tregs, have in blocking the cytotoxic T cell response. MDSCs and Tregs localize in the area surroundingthe tumor and, together with the immune checkpoints, play a significant role in helping a tumor evade detection and elimination by the immune system.MDSCs are a group of immature myeloid cells that are activated by disease or injury and are generally increased in cancer patients. The primary function ofMDSCs is to suppress an activated T cell immune response through the production and secretion of enzymes, which deplete key amino acids required for thegrowth and function of cytotoxic T cells. High levels of circulating MDSCs in various cancers, including breast, lung and head and neck, and others correspondwith a poor prognosis and limited response to cancer therapy. Recent data further indicates that high levels of circulating MDSCs in melanoma patients areinversely correlated with clinical response to immune checkpoint inhibitors suggesting that targeting MDSCs may offer new therapeutic opportunities that enhancethe anti-tumor response to immune checkpoint inhibitors.Tregs are immune suppressor cells that are recruited to sites of active immune response in order to shut down the cytotoxic T cell response. A definingfeature of immunosuppressive Tregs is the expression of a protein called FoxP3, or forkhead box p3. We refer to FoxP3+ Tregs as Tregs. Unlike MDSCs, whichare found in activated states in circulating blood, Tregs may be recruited to the area surrounding the tumor and activated by local signals from the cancer cell. Aswith MDSCs, an increase in the level of activated Tregs correlates with poor prognosis in a number of tumor types including breast, colorectal, ovarian and othercancers. Tregs suppress cytotoxic T cell responses through the secretion of cytokines that inhibit the growth of cytotoxic T cells. In addition, Tregs can cause otherimmune regulatory cells in the area surrounding the tumor to secrete immune suppressive enzymes. Inhibiting Tregs may therefore relieve immune suppression in away similar and potentially complementary to that of other immune-targeted approaches.Entinostat as ImmunotherapyPreclinical and clinical data combined with the safety data observed in treating more than 1,000 cancer patients to date support our belief that entinostat hasthe potential to enhance the efficacy of immune checkpoint inhibitors across multiple tumor types. Entinostat is a Class 1-specific HDAC inhibitor targeting thoseHDACs shown to impact the number and activity of MDSCs and Tregs. We believe that entinostat acts on a different tumor-evasion mechanism than that beingtargeted by most other immunotherapies in development and is the most advanced agent that can directly reduce both the number and activity of MDSCs and Tregswhile sparing the cytotoxic T cells. This impact of entinostat’s effect is presented in Figure 1 below, which illustrates how this mechanism can be highlycomplementary to immune checkpoint inhibitors. 6Table of ContentsFigure 1. Source: SyndaxData Supporting Entinostat as a Dual Inhibitor of Immune Suppressor CellsSeparate preclinical studies from investigators at Johns Hopkins University, or JHU, and Roswell Park Cancer Center have demonstrated that entinostat is adual inhibitor of immune suppressor cells through its targeting of both MDSCs and Tregs. Figure 2 below shows that entinostat reduces the growth of MDSCs atconcentrations that spare the growth of cytotoxic T cells. Approximately half of the MDSCs are stopped from growing at 200 nM of entinostat, which is 35 timesless than the concentration of entinostat that stops half of the cytotoxic T cells from growing. Figure 3 shows that entinostat can also inhibit MDSC function. In thisexperiment the investigators mixed MDSCs with cytotoxic T cells and determined the level of T cell activity by measuring secreted amounts of interferon-gamma,a cytokine that is important for the anti-tumor immune 7Table of Contentsresponse. Adding increasing amounts of entinostat results in higher levels of interferon-gamma secretion indicating that entinostat is enhancing cytotoxic T cellactivation by blocking MDSC suppression. Figure 2. Figure 3. Source: Kato et al 2007 American Association for Cancer Research Source: Adapted from Shen et al 2012 Public Library of ScienceEntinostat has also been shown to inhibit Treg activity in preclinical experiments. As shown in Figures 4 and 5 below, investigators have used an animalmodel of renal cell carcinoma called RENCA in order to demonstrate that entinostat could block Treg-mediated immune suppression in order to enhance theactivity of Proleukin ® (aldesleukin) an approved immune therapy for renal cell carcinoma. In Figure 4, the shaded areas on the mice indicate tumor growth, andthe size of individual tumors at the end of the study can be seen below each mouse. In this experiment, entinostat alone has some anti-tumor activity and whencombined with Proleukin results in a significant reduction in the growth and size of the tumors. The graph in Figure 5 shows that Proleukin alone increases thelevels of Tregs as a consequence of its immune activity and that entinostat alone, and in combination with Proleukin , blocks the increase in Tregs and reduces thenumber of immune-suppressive Tregs that are present in the tumor. In addition to reducing the number of immune-suppressive Tregs in this study, entinostat alsoincreases the number of activated cytotoxic T cells. Figure 4. Figure 5. 8Table of ContentsIn order to determine whether the effect of entinostat observed in preclinical research studies can also be observed in cancer patients treated with entinostat,we conducted an analysis on immune cells found in blood samples collected from a subset of patients treated in ENCORE 301, our Phase 2b clinical trial inadvanced HR+ breast cancer patients. As shown in Figure 6 below, in these peripheral blood samples, we observed a statistically significant reduction in the levelof circulating MDSCs in patients treated with the combination of entinostat and Aromasin , a hormone therapy, but not in patients treated with the combination ofplacebo and Aromasin . We believe this data collected from a subset of the ENCORE 301 patient population provided the first clinical evidence of entinostat-mediated reduction of immunosuppressive MDSCs in patients and is consistent with the impact on MDSCs observed in the preclinical animal studies.Figure 6. Source: SyndaxData Supporting Entinostat in Combination with Immune Checkpoint InhibitorsPreclinical . In order to determine whether entinostat could combine effectively with immune checkpoint inhibitors, investigators from JHU tested entinostatin combination with anti-PD-1 and anti-cytotoxic T-lymphocyte-associated protein 4, or CTLA4, directed antibodies in immune-resistant animal models. As shownin Figure 7 below, the elimination of both primary and metastatic tumors was observed in a 4T1 mouse breast cancer model that was treated with entinostattogether with dual PD-1/CTLA4 checkpoint inhibition. The 9Table of Contentsresearchers observed that entinostat, rather than attacking and destroying replicating cells as standard chemotherapy drugs do, reduced the number and activity ofMDSCs.Figure 7. Source: Adapted from Kim et al 2014 Proceedings of the National Academy of SciencesClinical . Based on the clinical outcome of patients who were treated in two unrelated clinical trials, physicians at JHU observed preliminary evidence for thepotential beneficial effects of combining entinostat with a PD-1 or PD-L1 inhibitor. In a heavily pre-treated metastatic NSCLC population, patients given thecombination of entinostat and Vidaza ® (azacitidine), an approved chemotherapeutic drug, achieved few objective responses and only a modest 4% overall responserate. However, investigators observed that these same patients who received the combination of entinostat and Vidaza and who subsequently received immunecheckpoint therapy demonstrated a higher response rate than that expected for this patient population. Figure 8 below illustrates that all five patients who receivedeither Opdivo ® , an approved anti-PD-1, or an investigational PD-L1 inhibitor as their next therapy derived durable clinical benefit. Three of the patients haddurable responses and two had durable stable disease. This enhanced response rate was better than an expected 15% response to Opdivo alone observed in a similaradvanced NSCLC population and led investigators to hypothesize that the prior effect of the combination of entinostat and Vidaza therapy was “priming” thetumors to the subsequent immune therapy. To confirm these findings and further explore the ability of the combination of Vidaza and entinostat to enhance the 10Table of Contentsresponse of NSCLC patients to Opdivo , the investigators at JHU have initiated a follow-on randomized Phase 2 clinical trial, J1353.F i gure 8. Source: Adapted from Wrangle et al 2013 OncotargetEntinostat with Immune Checkpoint Inhibitors in NSCLC and MelanomaMarket Overview and Current Treatment—NSCLCLung cancer is the leading cause of cancer death among men and women, with more people dying of lung cancer each year than of colon, breast, and prostatecancers combined. According to the American Cancer Society, approximately 80% to 85% of lung cancers are NSCLC; and in 2017, an estimated 222,500 newcases of lung cancer will be diagnosed and an estimated 155,870 people will die from lung cancer in the United States. The five-year survival rate for patients withNSCLC generally is 18% and for patients with Stage III/IV NSCLC is approximately 6%, indicating a significant need for new therapies that can prolong overallsurvival.Advanced metastatic NSCLC is a severe disease with a poor prognosis in the majority of patients with limited treatment options to date. Treatment typicallyincludes a first-line combination chemotherapy followed by a choice of a second-line therapeutic approach. Most patients receiving first-line chemotherapy willrelapse within one year of treatment with a median PFS of approximately five to six months and median overall survival of approximately 10 to 12 months. In thesecond-line setting, the median PFS is approximately three to four months and median overall survival is approximately six to seven months.The treatment paradigm of NSCLC has been changing significantly since early 2015 when the FDA approved Opdivo, an anti-PD-1 monoclonal antibody asthe first immune-targeted drug to treat people with squamous NSCLC in patients who have relapsed after platinum-based chemotherapy. Since the approval ofOpdivo (nivolumab), two additional check point inhibitors. Tecentriq a PD-L1 antibody from Roche/Genentech, and Keytruda, a PD-1 antibody from Merck, havealso been approved as a treatment for both squamous and nonsquamos NSCLC patients after use of platinum-based chemotherapy. The efficacy data observed withthese 11Table of Contentsagents represents a significant increase from what has traditionally been expected of drugs approved to treat advanced NSCLC, and we believe that immunecheckpoint inhibitors have become the standard of care for this patient population. Keytruda has also demonstrated an improvement over standard platinum-basedchemotherapy in patients with advanced NSCLC, with ³ 50% PD-L1 expression in their tumors that had not received prior systemic treatment for advancedNSCLC.There are other PD-L1 inhibitors being developed to treat NSCLC, including AstraZeneca plc’s durvalumab (MEDI4736), and Merck KGaA /Pfizer’savelumab. The clinical development programs for all of these therapies have been designed to understand the broad impact they could have across NSCLC,including chemotherapy-naive and previously treated patients. We anticipate the immune checkpoint inhibitors will be available for use across the spectrum ofadvanced NSCLC patients.However, even as the development of these immune checkpoint inhibitors represent a significant advance for NSCLC patients, most patients may still seetheir disease progress and the proportion of treated patients with low PD-L1 expression who respond to approved regimens is quite low (15 to 20%). We believewith these disease-progressing patients and low response rates, there is significant room to improve upon the benefit of PD-L1 inhibitors through combinations withdrugs, like entinostat, that target immune modulation through complementary mechanisms.Market Overview and Current Treatment—MelanomaThe incidence of malignant melanoma in most developed countries has risen faster than any other cancer type since the mid-1950s. In 2011, the averagesurvival duration for patients with Stage IV melanoma, in which the melanoma has metastasized, was only six to ten months; and the five-year survival rate forsuch patients was 16%. Although this rate had not changed in some time, a recent major advance for melanoma came with the development and approval of drugssuch as Zelboraf ® (vemurafenib), Tafinlar ® (dabrafenib) and Mekinist ® (trametinib), for patients with a mutated BRAF gene, which is a human gene that encodesa protein called B Raf.Melanoma is a particularly immuno-responsive tumor, and thus, immunotherapy of melanoma has developed as a dynamic field for clinical research. Todate, immunotherapies such as Yervoy ® (ipilmumab), Keytruda and Opdivo , have been approved for the treatment of malignant melanoma patients withunresectable or metastatic disease. However, in this tumor type as well, the immunotherapies represent a significant advance for only a small proportion of patients,leaving significant room to improve upon the benefit of immune checkpoint inhibitors through combinations with drugs, like entinostat, that target immunemodulation through complementary mechanisms.Our Development of Entinostat in NSCLC and MelanomaWe have a clinical collaboration underway with Merck to study the safety and efficacy of entinostat in combination with Keytruda in patients with NSCLCand malignant melanoma. The ENCORE 601 clinical trial is a Phase 1b/2 clinical trial. The Phase 1b portion evaluated the safety, tolerability and biomarkercorrelates of the combination of entinostat and Keytruda in patients with NSCLC. The Phase 2 portion is assessing both the safety and efficacy of entinostatcombined with Keytruda in patients with NSCLC and melanoma. The trial is an open label, dose escalation study with cohort expansions at the recommendedPhase 2 dose, or RP2D, in NSCLC and melanoma patients. We are conducting the trial in the United States and will enroll 158 patients with 22 of those havingbeen enrolled in the Phase 1b portion and approximately 136 of those to be enrolled in the Phase 2 portion. We announced safety data and RP2D data from thePhase 1b portion in the first half of 2016 and in the second half of 2016, respectively. Patient enrollment in the Phase 2 portion was initiated in October 2016, andwe expect final efficacy data in 2018.The primary objective of the Phase 1b portion of the trial was to determine the dose-limiting toxicities, or DLT, maximum tolerated dose, or MTD, or theRP2D of entinostat given in combination with Keytruda . The 12Table of Contentsinitial three patients in Cohort 1 received weekly oral entinostat at a starting dose of 3 mg along with Keytruda 200 mg via intravenous infusion. Enrollment inCohort 1 was increased to six patients after one of the initial three patients developed a serious immune-mediated adverse event. The patient in question developedGrade 3 elevations in alkaline phosphatase and serum bilirubin, which were considered to be manifestations of immune-mediated hepatitis. Immune-mediatedhepatitis is included in the Keytruda U.S. Prescribing Information as a potential adverse drug reaction. The adverse event was successfully managed by withholdingstudy drugs and administering systemic corticosteroids, leading to a rapid normalization of the abnormal laboratory values and resolution of symptoms. Based on athorough safety review of all six patients, which demonstrated no similar events or any other dose-limiting toxicities, the 3 mg dosing was deemed tolerable; and inDecember 2015, dosing was escalated to entinostat weekly oral doses of 5 mg, which enrolled seven patients. The prospective RP2D was confirmed in nineadditional patients. The Phase 1b portion of the clinical trial also characterized the effect of the combination therapy on numerous biomarkers, including expressionof PD-1 and PD-L1, the number and function of different types of T cells and the number of MDSCs. We are assessing these biomarkers both in peripheral bloodand in serial tumor biopsies.In the Phase 2 portion of the clinical trial, we are evaluating entinostat in combination with Keytruda using the RP2D identified in the Phase 1b portion withthe primary objective of evaluating the efficacy of the combination in three expansion cohorts. In each cohort we are using a two-stage design in which a definedminimum number of responders must be seen in the first stage in order for the cohort to advance to full enrollment in the second stage. We have recently completedenrollment of the three cohorts in the first stage of the Phase 2 portion in patients with NSCLC and melanoma and therefore have closed enrollment for thesecohorts. The first stage of the Phase 2 portion of the trial was designed to evaluate the results from these first cohorts and make an informed decision aroundexpanding and progressing any, all or none of the cohorts into the next stage of the trial only after attaining a certain pre-specified and meaningful level of objectiveresponse in each cohort. In February 2017, the melanoma cohort of the 601 trial met the pre-specified objective response threshold; and we progressed to thesecond stage of the trial. This cohort will now enroll an additional 21 patients . Data from the other two cohorts, which will determine whether or not they continueonto Stage 2, is still maturing and is expected in the first half of 2017. If the pre-specified level of objective response is achieved and we reopen enrollment, Cohort1 will enroll up to 46 NSCLC patients with any histology who have not previously been treated with a PD-1/PD-L1 inhibitor. We anticipate all 46 patients wouldbe enrolled by the end of the second half of 2017. If the prescribed level of objective response is achieved and we reopen enrollment, Cohort 2 will enroll up to 56patients with NSCLC of any histology who have previously been treated and progressed on a PD-1 or PD-L1 blocking antibody. We anticipate that all 56 patientswould be enrolled by the end of the second half of 2017. Cohort 3 is enrolling up to 34 patients with melanoma who have previously been treated and progressed ona PD-1 or PD-L1 blocking antibody. We anticipate all 34 patients will be enrolled by the end of the second half of 2017.Secondary objectives of the trial include assessments of safety, efficacy as measured by clinical benefit rate at six months, PFS at six months, overall PFS,overall survival, duration of response and time to response. Additional exploratory objectives include evaluation of changes in biomarkers in blood and tissuesamples collected from patients that may reflect entinostat activity on immune cells. 13Table of ContentsDetails of the trial design are provided below: Entinostat with Immune Checkpoint Inhibitors in TNBCMarket Overview and Current TreatmentBreast cancer is the leading cause of cancer death in women worldwide and the second leading cause of cancer death in women in the United States afterlung cancer. According to the American Cancer Society, in 2017 approximately 253,000 new cases of invasive breast cancer will be diagnosed in the United Statesand an estimated 41,000 people will die from breast cancer in the United States. Although the five-year survival rate for women diagnosed with non-metastaticbreast cancer is over 85%, the five-year survival rate for women diagnosed with metastatic breast cancer is only 24%, indicating the need for new therapies that canprolong overall survival.Breast cancers can be divided into three subsets based on the presence or absence in the tumor of the following protein receptors: • HR+, which means expressing the estrogen receptor, or ER, or progesterone receptor, or PR, alone or in combination with each other; • HER2+, which means expressing the human epidermal growth factor receptor 2, or HER2 receptor; and • Triple negative, which means not expressing ER, PR or HER2.TNBC represents 15-20% of newly diagnosed breast cancer cases, and is associated with a younger age at diagnosis, advanced stage at diagnosis, increasedrisk of visceral metastasis and poorer outcome. The five-year survival rate for women diagnosed with Stage IV TNBC is only 22% with limited treatment options.Preliminary data has indicated that treatment with PD-L1 inhibitors results in approximately a 20% response rate in women with TNBC, and Tecentriq andKeytruda are currently being studied in Phase 3 clinical trials.Our Development Plan of Entinostat in TNBCWe established a clinical collaboration with Genentech to study the safety and efficacy of entinostat in combination with atezolizumab, an anti-PD-L1antibody, in patients with TNBC. The ENCORE 602 clinical trial 14Table of Contentsis a Phase 1b/2 clinical trial, and the Phase 1b portion is initially evaluating the safety of weekly oral entinostat at a dose of 5 mg administered in combination with1,200 mg of atezolizumab given intravenously every three weeks. Enrollment in the Phase 1b trial was completed in November 2016. The RP2D of entinostat wasestablished as 5 mg weekly. The Phase 2 portion of the trial was opened in December 2016. The Phase 2 portion of the clinical trial is a randomized, double-blind,placebo-controlled trial. The primary endpoint of the Phase 2 clinical trial is PFS, with response rate, duration of response, time to response and overall survival assecondary end points. Additional exploratory objectives include evaluation of changes in biomarkers in blood and tissue samples collected from patients that mayreflect entinostat activity on immune cells. We anticipate efficacy and safety data from the Phase 2 portion in 2018.Entinostat with Immune Checkpoint Inhibitors in Ovarian CancerMarket Overview and Current Treatment—Ovarian CancerThe American Cancer Society indicates that approximately 22,000 women will be diagnosed and just over 14,000 will die from ovarian cancer in the UnitedStates in 2017. The past few decades have seen some improvement in median five-year survival for women diagnosed with ovarian cancer, but the trend has beenmodest, increasing from 36% in 1977 to 45% in 2017.Currently, more than 60% of women are diagnosed with advanced disease and therapeutic options for these patients are still dominated by traditionalchemotherapeutics, such as platinums, taxanes and anthracyclines. Since 2014, three targeted agents have been approved for later line treatment of refractorypatients: Avastin ® (bevacizumab), a vascular endothelial growth factor specific angiogenesis inhibitor, and two poly ADP-ribose polymerase, or PARP, inhibitors,Lynparza ® (olaparib), and Rubraca TM (rucaparib), which recently received accelerated approval for patients with deleterious breast cancer susceptibility gene, orBRAC, mutations. However, the median duration of response to any of these drugs was still less than 10 months, highlighting the need to further improve uponpatient care. The safety and the efficacy of immune-targeted therapy in ovarian cancer has not yet been demonstrated, but Tecentriq and avelumab are in Phase 3development.Our Development Plan of Entinostat in Ovarian CancerWe have a clinical trial collaboration with Merck KGaA and Pfizer to study the safety and efficacy of entinostat in combination with avelumab, aninvestigational anti-PD-L1 antibody, in patients with ovarian cancer. The ENCORE 603 clinical trial is designed as a Phase 1b/2 clinical trial, where the Phase 1bportion will initially evaluate the safety of weekly, oral entinostat with avelumab. If this combination is well tolerated, the Phase 2 portion of the clinical trial willbe designed as a randomized, double-blind, placebo-controlled trial. The primary endpoint of the Phase 2 clinical trial will be PFS, with response rate, duration ofresponse, time to response and overall survival as secondary end points. Additional exploratory objectives include evaluation of changes in biomarkers in blood andtissue samples collected from patients that may reflect the effect of entinostat on immune cells. Enrollment of patients into the Phase 1b portion of the ENCORE603 clinical trial began in January 2017; and safety data, including the determination of the RP2D, is expected from the Phase 1b portion in the first half of 2017.Investigator-Sponsored Clinical Trials of Entinostat in Immuno-OncologyWe believe that there are additional opportunities for expanding the indications in which entinostat may target immunologic mechanisms of resistance tocancer therapies. In addition to our collaborations with Merck, Genentech, Merck KGaA and Pfizer, we have partnered with independent investigators to supportclinical trials that are designed to validate both clinical and preclinical observations that entinostat can enhance the clinical activity of immune therapy in patients.We do not control the timing of these clinical trials and cannot provide any assurance with respect thereto. 15Table of ContentsJ1353: Epigenetic Priming to Immunotherapy Trial . This JHU investigator-sponsored Phase 2 clinical trial, funded by Stand Up To Cancer , is currentlyenrolling up to 90 patients with metastatic NSCLC and is designed to test the ability of epigenetic therapy—a combination of entinostat and Vidaza —to enhancethe response of NSCLC patients to Opdivo .NCI-7870: Entinostat + High Dose Interleukin in Metastatic Renal Cell Carcinoma . This investigator-sponsored Phase 1/2 clinical trial funded by theNCI was designed to determine the safety and efficacy of entinostat combined with Proleukin , an approved immune therapy for patients with metastatic renal cellcarcinoma. Proleukin as a single agent in metastatic renal cell carcinoma has demonstrated a 15% to 25% objective response rate and approximately four monthsmedian PFS. The clinical trial was designed to test whether entinostat combined with Proleukin could increase the primary endpoint of response rate from 20% to40%; the secondary endpoint was PFS. Entinostat was dosed orally starting at 3 mg once every other week, and once that dose was shown to be well-tolerated,additional patients were enrolled at a dose of 5 mg of entinostat once every other week. Proleukin was provided at the standard dose of 600,000 units/kg every eighthours for five days followed by a second course. Preliminary results from the completed Phase 1 portion indicated that entinostat may be given safely incombination with Proleukin and indicated that entinostat potentially enhances the response to Proleukin with evidence of causing beneficial changes in certainimmune cell functions such as reduction of immune-suppressive Tregs. Phase 1 portion indicated that entinostat can be given safely in combination with Proleukinand indicated that entinostat potentially enhances the response to Proleukin with evidence of causing beneficial changes in certain immune cell functions such asreduction of immune-suppressive Tregs. The Phase 2 portion of the trial has completed enrollment with 47 patients evaluable for safety and 43 evaluable forefficacy. Data were presented at the annual meeting of the American Society of Clinical Oncology in June 2016 demonstrating a response rate of 37% (95% CI 22,53%) in 41 patients with measurable disease and a median PFS of 13.8 months (95% CI 6.0, 18.8 months). The investigators concluded that the results suggest thatentinostat may increase the anti-tumor activity of Proleukin by modulating immunosuppressive cells.NCI-9844: Efficacy of Entinostat in Combination with Opdivo and Yervoy in Patients with Metastatic or Unresectable Solid Tumors . Thisinvestigator-sponsored Phase 1 clinical trial, which is being sponsored by the NCI, is designed to enroll up to 39 patients to study the safety profile and best dose ofentinostat and Opdivo when given together with Yervoy in treating patients with metastatic or unresectable solid tumors or metastatic HER2- breast cancer. Thetrial began enrolling patients in the first quarter of 2016 with data expected in the second half of 2017.Entinostat in Advanced HR+ Breast CancerMarket Overview and Current TreatmentIn the past, certain patients in the United States with advanced HR+ breast cancer were treated with hormone therapies with the goal to prolong overallsurvival and to delay treatment with more toxic chemotherapies. Hormone therapies are designed to inhibit estrogen stimulation of advanced HR+ breast cancers.Due to limited efficacy of hormone therapies in the advanced HR+ breast cancer setting, multiple lines of treatment are typically used, with each additional line ofhormone therapy resulting in a shorter PFS and lower overall survival. Resistance to hormone therapies develops as a result of activation of growth-factor signalingpathways. The median overall survival for advanced HR+ breast cancer in the first- and second-line setting is approximately three to four years and two years,respectively.In 2016, approximately 34,000 patients with HR+ breast cancer were treated with a hormone therapy as second-line or later treatment in the United States.Researchers have demonstrated that the diminished clinical benefit of each hormone therapy is due to primary and acquired resistance to hormone therapy. Thecause of resistance is multi-factorial and results in tumor progression independent of estrogen stimulation.Current treatment of advanced HR+ breast cancer usually includes multiple courses of hormone therapy followed ultimately by chemotherapy. There arethree types of commonly used hormone therapies. These are 16Table of ContentsSoltamox ® (tamoxifen), a selective ER modulator, Faslodex ® (fulvestrant), a selective ER downregulator, and aromatase inhibitors, such as Arimidex ®(anastrozole), Femara ® (letrozole) and Aromasin , which interfere with estrogen production. Aromasin , a steroidal aromatase inhibitor, is typically used as asecond- or third-line treatment upon progression from first-line treatment with the non-steroidal aromatase inhibitors Arimidex and Femara .In 2012, the FDA approved Afinitor ® (everolimus), an inhibitor of mammalian target of rapamycin for the treatment of postmenopausal women withadvanced HR+ and HER2-, breast cancer in combination with Aromasin , after failure of treatment with Femara or Arimidex . The approval was based on resultsfrom a randomized Phase 3 clinical trial of postmenopausal women with advanced estrogen receptor-positive, HER2-, breast cancer with recurrence or progressionfollowing prior therapy with Femara or anastrozole. The median PFS was 7.8 months for patients receiving Afinitor and 3.2 months for patients receiving placebo.Based on these results, Afinitor has become a treatment option for patients refractory to aromatase inhibitor therapy. However, the combination of Aromasin andAfinitor did not confer an improvement in overall survival.More recently, in early 2015, the FDA granted accelerated approval to Ibrance ® (palbociclib), a cyclin-dependent kinase 4 and 6 inhibitor, or CDK4/6, forthe treatment of breast cancer in the first-line setting in postmenopausal women with metastatic disease, in combination with Femara , an aromatase inhibitor. Theapproval of Ibrance was based on the results of a randomized Phase 2 clinical trial of postmenopausal women with ER+, HER2- breast cancer, which demonstrateda 10-month increase in median PFS for the combination of Ibrance and Femara versus Femara alone. During the first quarter of 2016, the FDA granted approval toIbrance for use in combination with Faslodex in women with HR+, HER2- breast cancer disease progression following endocrine therapy. Overall survival has notbeen reported for Ibrance clinical trials to date. However, based on the significant PFS benefit observed with Ibrance with endocrine therapy, it has become thestandard first-line therapy in this patient population.Ribociclib , a CDK4/6 inhibitor from Novartis International AG, or Novartis, has demonstrated PFS benefit in a Phase 3 trial in combination with letrozole.Novartis has indicated that it expects an approval decision for ribociclib from the FDA in the first half of 2017. Based on the results and preclinical cross resistancebetween Ibrance and ribociclib , we believe ribociclib , if approved, would compete for the patient population already being treated by Ibrance .While the treatment of advanced HR+ breast cancer is evolving given the introduction of both Ibrance and Afinitor, we believe physicians will welcome theintroduction of a well-tolerated therapy that improves overall survival, which has not been demonstrated to date for either Ibrance or Afinitor in combination withhormone therapy. Current data suggest that entinostat could demonstrate a favorable benefit-risk profile and an improvement in overall survival, and thus maybecome a preferred treatment option for patients with advanced HR+ breast cancer who have stopped responding to their first line endocrine-based regimen.Our Development of Entinostat in Advanced HR+ Breast CancerWe have completed a Phase 2b clinical trial, ENCORE 301, of entinostat in advanced HR+ breast cancer in 130 postmenopausal patients. The trial was arandomized, placebo-controlled clinical trial in which treatment with entinostat was observed to result in a significant advantage to patients when given in additionto Aromasin therapy. Postmenopausal patients with advanced HR+ breast cancer progressing on a non-steroidal aromatase inhibitor were randomly assigned to thecombination of Aromasin (25 mg daily) and entinostat (5 mg once per week) or to the combination of Aromasin (25 mg daily) and a placebo. The primary endpointwas PFS, with overall survival as an exploratory endpoint.A Kaplan-Meier plot is a graphical statistical method commonly used to describe survival characteristics. The following are explanations of the meanings ofthe various efficacy endpoints that we have used in describing 17Table of Contentsthe results of our Phase 2b clinical trial. Each is determined in accordance with Response Criteria in Solid Tumors measurement guidelines. • P-value : a statistical measure that represents the probability that the difference that is observed between two treatment arms is due to random chanceand is not actually related to the treatments being compared. For example, p-value of 0.1 indicates there is a 10% chance the difference that is observedbetween the treatment arms is due to random chance. • Confidence interval : a statistical measure that indicates a range, which is believed to include the true effect parameter with some level of confidence.For example, a 95% CI is the range at which one is 95% sure, with a 5% chance of being wrong, that the range given includes the true effectparameter. • Hazard ratio : represents the chance of events occurring in the treatment arm relative to the chance of events occurring in the control arm. A hazardratio of one means that there is no difference in survival between the two groups. A hazard ratio of greater than one or less than one means thatsurvival was better in one of the groups.The trial met the statistical criteria for a positive PFS endpoint using a pre-specified p-value of 0.10 from a one-sided test for statistical significance. Theoverall survival benefit observed in the entinostat/ Aromasin (exemestane tablets) (EE) group was also statistically significant versus the Aromasin (exemestanetablets)/placebo (EP) group. The results are summarized below along with the Kaplan-Meier plot for PFS and overall survival. • Median PFS approximately doubled to 4.3 months in the EE group versus 2.3 months in the EP group, corresponding to a statistically significanthazard ratio of 0.73; 95% CI, 0.50 to 1.07; P2-sided=0.11; P1-sided=0.055. • Median overall survival improved to 28.1 months in the EE group versus 19.8 months in the EP group, corresponding to a statistically significanthazard ratio of 0.59; 95% CI, 0.36 to 0.97; P2-sided=0.036; P1-sided=0.018. • Fatigue and neutropenia were the most frequent Grade 3 and Grade 4 toxicities. We have utilized forest plots, which are a form of graphical display designed to illustrate the relative strength of treatment effects across multiple subgroups,to highlight the consistency of the clinical benefit of EE treatment across multiple subgroups for both the PFS and overall survival endpoints. In addition, weanalyzed the post-study treatments that patients received to determine whether there were imbalances in the subsequent treatment that could account for thedifference in overall survival observed between the EE and EP groups. The 18Table of Contentstwo groups were well balanced for the first and all subsequent cancer therapies, which suggest that a favorable result for overall survival is unlikely due todifferences in the therapies patients received after discontinuing study treatment. Plot Legend • NSAI : non-steroidal aromatase inhibitor. • Visceral involvement : refers to advanced HR+ breast cancer that has spread to any of the internal organs in the body. • NSAI sensitive : indicates a complete response, partial response or stable disease greater than six months on prior non-steroidal aromatase inhibitor therapy;all other patients considered NSAI resistant.Safety was assessed by utilizing the NCI’s Common Terminology Criteria for Adverse Events—Version 3. When entinostat was added to Aromasin , theadverse event, or AE, profile was consistent with previous clinical experience with entinostat treatment. Overall, the EE group had a higher rate of AEs versus theEP group at 95% and 85%, respectively, with the most common AEs in the EE group being fatigue, gastrointestinal disturbances, such as nausea, vomiting anddiarrhea, and hematologic toxicities, such as uncomplicated neutropenia, thrombocytopenia and anemia. The EE group had more AEs leading to dose modification(35% versus 6%), and more AEs leading to study discontinuation (11% versus 2%), irrespective of study drug relationship. 19Table of ContentsFor hematological toxicities, thrombocytopenia was managed by dose modification during entinostat treatment, with all cases being non-severe and nonerequiring drug discontinuation. In approximately half of the patients who experienced Grade 3 neutropenia, it was managed by dose modification, with only onecase leading to entinostat discontinuation. Additional reasons leading to EE discontinuation included two patients owing to nausea and vomiting and one patienteach owing to weakness in extremities, hypoxia/radiation pneumonitis, fatigue and mucositis.The incidence of serious AEs was similar between the EE and EP groups at 16% and 12%, respectively, with four EE patients each experiencing a Grade 4AE, including fatigue, leucopenia, neutropenia and hypercalcemia. One fatal AE occurred in each treatment arm with the EE event considered related to diseaseprogression. We did not observe significant cardiovascular effects in this trial, which have been reported with other HDAC inhibitors.Following positive results from our Phase 2b clinical trial, entinostat in combination with Aromasin was granted breakthrough therapy designation by theFDA in advanced HR+ breast cancer and is currently being evaluated in a Phase 3 clinical trial for advanced HR+, HER2- breast cancer.E2112: Ongoing Pivotal Phase 3 Clinical TrialIn order to confirm the PFS and overall survival benefits observed in the Phase 2b clinical trial, we have partnered with ECOG-ACRIN to develop andconduct the Phase 3 clinical trial. ECOG-ACRIN is conducting the trial under sponsorship and funding support from the NCI. We are providing financial andoperational support for the Phase 3 clinical trial under a Cooperative Research and Development Agreement, or CRADA, with the NCI and a separate agreementwith ECOG-ACRIN. The trial is a randomized, double-blind, placebo-controlled trial of entinostat in combination with Aromasin compared to Aromasin and aplacebo. 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 theNCI in January 2014. The trial initiated enrollment of 600 patients in the second quarter of 2014. Based on information received from ECOG-ACRIN to date, weexpect that the trial will require at least 40 months to fully enroll patients with primary PFS endpoint data expected no sooner than the end of the second half of2017. Since we are not responsible for the conduct of the E2112 clinical trial, we cannot provide assurance that this trial will be completed or that data will bereceived on the timeline indicated.The primary objective of the trial is to evaluate whether the addition of entinostat to Aromasin improves PFS, overall survival or both PFS and overallsurvival in patients with advanced HR+, HER2- breast cancer who have previously progressed after treatment with standard of care hormonal agents such as NSAIsor Faslodex . The NCI and ECOG-ACRIN, in collaboration with us, have designed the trial to have two primary endpoints of PFS and overall survival. If data arepositive, we expect that either endpoint may serve as the basis for submitting a new drug application, or NDA. The Phase 3 clinical trial also contains secondarypatient-reported outcomes, or PRO, endpoints to evaluate differences between arms in treatment toxicities, reduced symptom burden as an indicator of treatmentresponse, and overall health-related quality of life. PRO measures are common in ECOG-ACRIN therapeutic trials due to the scientific aims of its CancerControl & Outcomes Program, which seeks to increase understanding, from the patient perspective, about how novel therapies impact quality of life. Secondaryobjectives of the trial include assessments of safety, response rate and biomarker analysis. 20Table of ContentsDetails of the trial design are provided below: The enrollment size of 600 patients in the trial is adequate for achieving a statistically significant difference in median PFS with a p-value less than 0.002 andin median overall survival with a p-value less than 0.048 based on the trial supporting a hypothesized hazard ratio of 0.58 for PFS and 0.75 for overall survival. Ifthe hypothesized hazard ratio for PFS is true, the PFS endpoint has an 88.5% chance of success. Similarly, if the hypothesized hazard ratio of overall survival istrue, the overall survival endpoint has an 80% chance of success.The primary analysis of PFS will be conducted when 247 PFS events occur out of the initial 360 patients enrolled. At the time of the primary PFS analysis,the first interim analysis of overall survival will also be conducted. Stopping rules based upon the interim analyses of overall survival have been outlined such thatenrollment may terminate early if the statistical boundary for overall survival is met. Because of the smaller numbers of patients and limited length of follow-up atthe time of the first interim analysis of overall survival, we do not expect to meet the criteria for early stopping at that time.In the absence of early stopping, the results of the primary analysis of PFS will be made available to us when all 600 patients have entered the trial, which isanticipated to be no sooner than the second half of 2017. If the PFS endpoint is met, interim overall survival results will be released to us at that time as well. If theoverall survival data demonstrate a positive trend, we expect they will be used to supplement new drug application, or NDA, submission based on meeting theprimary PFS endpoint and agreement with the FDA that the PFS data are statistically significant and clinically meaningful to support an NDA submission.The primary analysis of overall survival data represents another opportunity for submission of an NDA to the FDA for potential approval. The primaryanalysis of overall survival will occur when 410 deaths from among the 600 patients enrolled have occurred. Based on information received from ECOG-ACRIN todate, we expect this analysis to occur no sooner than 2019.In addition to these analyses, if the primary analysis of PFS fails to achieve statistical significance, a positive overall survival outcome at any interim analysisduring the conduct of the trial will also be a potential approval pathway. ECOG-ACRIN will perform up to seven interim analyses of overall survival,approximately every six months, to assess the potential superiority of the combination of entinostat and Aromasin relative to the combination of Aromasin and aplacebo. The 410 deaths required for the primary analysis of overall survival takes into consideration any statistical impact of the various interim analyses on theanalysis of the overall survival endpoint. If the interim analyses do not demonstrate a statistically significant overall survival benefit, ECOG-ACRIN will notrelease the results of such interim analyses to us. 21Table of ContentsAdditional Clinical Trials in Support of the Entinostat NDA EntinostatIn parallel with the pivotal Phase 3 clinical trial, we are conducting a number of required clinical pharmacology trials required for the submission of theNDA for entinostat. In 2015, we conducted a Phase 1 clinical trial to determine how much entinostat is absorbed by patients, how it is distributed in the body andhow it is metabolized and excreted. Results of this clinical trial were released in 2016 and consistent with prior entinostat pharmacokinetic data and showed thatentinostat is primarily excreted through the kidneys. Data results have also lead to an investigation into whether or not identification of other entinostat metabolitesare necessary.We are currently conducting a Phase 1 clinical trial, which was initiated in June 2016, to determine whether entinostat interferes with the pharmacologicalproperties of Aromasin (drug-drug interaction trial) and a Phase 1 clinical trial, which was initiated in September 2016, to confirm previous findings that there areno cardiac safety signals associated with entinostat treatment. Other trials, which were initiated in the second half of 2016 include a healthy volunteer trial of theeffect of proton pump inhibitors on entinostat and a healthy volunteer trial to examine the pharmacokinetics of the effects of food on entinostat dosing. These trialsare expected to have data readouts in the second half of 2017.We also anticipate conducting a drug-drug interaction trial to determine whether entinostat interferes with the pharmacological properties of midazolam inhealthy volunteers. A clinical trial to assess whether or not patients with renal impairment are able to achieve clearance of entinostat to the same extent as patientswithout renal impairment, is also planned in 2017 with data expected by the end of 2017.Additional Development Activities of EntinostatWe are currently collaborating with the NCI and investigators on combination trials of entinostat with other therapies across additional multiple tumor typessuch as HER2+ breast cancer, NSCLC and acute myeloid leukemia. Each of these trials is being funded either by the NCI or as investigator-initiated studies fundedthrough grants and sponsoring institutions. Since we are not responsible for the conduct of these clinical trials, we cannot provide assurance that they will becompleted or that data will be received on the timeline indicated. • NCI-8871: HER2+ Breast Cancer . We are collaborating with investigators at MD Anderson Cancer Center to determine whether the addition ofentinostat to a second HER2 targeted therapy can overcome the resistance that had developed in response to prior HER2 targeted therapy. A Phase 1dose escalation trial of entinostat with Tykerb ® (lapatinib), a small molecule dual inhibitor of HER2 and EGFR signaling, has established thefeasibility and safety of that combination. A second Phase 1 clinical trial studying entinostat in combination with Tykerb and Herceptin ®(trastuzumab), a monoclonal antibody inhibitor of HER2 signaling, has recently completed patient enrollment and has established the feasibility andsafety of the triple combination. A total of 37 patients have been enrolled in the Phase 1 trial. Preliminary data from this trial was presented at the 2015San Antonio Breast Cancer Symposium with the authors concluding that entinostat combined with Tykerb and Herceptin was generally well toleratedwith preliminary evidence of efficacy in metastatic HER2+ patients whose disease progressed on Herceptin . • NCI-9253: Epigenetic Priming to Chemotherapy . This NCI-sponsored Phase 2 clinical trial is currently enrolling up to 165 patients with advancedNSCLC and is designed to test the ability of epigenetic therapy—a combination of entinostat and Vidaza —to enhance the response of NSCLCpatients to chemotherapy. Data from this trial are expected in the second half of 2017.SNDX-6352We and our collaborators are developing SNDX-6352 to bind to CSF-1R and block the ability of CSF-1 and IL-34 to bind to and activate CSF-1R signaling.UCB Biopharma Sprl, or UCB, has demonstrated in preclinical studies that were designed to measure the amount of SNDX-6352 bound to the CSF-1R, thatSNDX-6352 binds 22Table of Contentsto human CSF-1R with high affinity as indicated by a dissociation constant value, or KD, of 4-8 picomolar (pM). These studies also showed that SNDX-6352 canbind to human and cynomolgus monkey CSF-1R but not rodent CSF-1R.One way in which investigators show that CSF-1 and IL-34 bind to and activate CSF-1R is to measure the amount of a secreted factor known as monocytechemotactic protein 1, or MCP-1, that is released by cells when CSF-1R signaling is activated. A lower amount of MCP-1 can mean that the binding of CSF-1 andIL-34 have been blocked. Preliminary research shows that SNDX-6352 potently inhibits both CSF-1 and IL-34 induced MCP-1 release from human monocytes(IC50, 270pM and 100pM, respectively).A second way in which investigators measure the activity of CSF-1R blockade is to count the number of circulating cells known as non-classical monocytes.The cells can be identified by expression of cell surface markers called CD14 and CD16. Researchers have shown that blocking CSF-1R signaling results in adecrease in the number of non-classical monocytes, and SNDX-6352 has been shown to reduce the number of non-classical monocytes in a preclinical trial.A third way to demonstrate that SNDX-6352 can bind to CSF-1R and block binding of CSF-1 is to measure the level of circulating CSF-1 in the blood.Researchers have shown that blocking CSF-1R results in increased levels of CSF-1. The amount of circulating CSF-1 can therefore be used as measurement of theamount of SNDX-6352 bound to CSF-1R. In order to understand the expected clinical activity of SNDX-6352 in human subjects, we and our collaborators haveconducted studies with SNDX-6352 across a range of doses in cynomolgus monkeys. Our preclinical data indicate that SNDX-6352 causes sustained increases inCSF-1 levels for at least 14 days at doses greater than 5 mg per kilogram of bodyweight.We believe that the results of UCB’s preclinical studies combined demonstrate that SNDX-6352 is a potent CSF-1R binding antibody that can block theactivation of CSF-1R signaling through both IL-34 and CSF-1 and reduce the number of CSF-1R expressing target cells.Our near-term focus is to rapidly establish proof of concept that SNDX-6352 can provide meaningful clinical benefit to patients in one or more tumor typeswhen combined with standard of care therapies for a given indication. We intend to conduct clinical trials in patients with tumor types having clear unmet needs(e.g., NSCLC, TNBC, prostate, melanoma, pancreatic, ovarian) and where we believe that the inhibition of TAMs via CSF-1R inhibition will synergize with thecurrent standard of care, inducing tumor regressions.In order to determine the initial safety profile of SNDX-6352, we commenced SNDX-6352-0001, a single ascending dose Phase 1 clinical trial in the fourthquarter of 2016. In addition to assessing safety assessment at increasing doses of SNDX-6352, we will collect information on the concentration of SNDX-6352 andlevels of CSF-1, IL-34 and non-classical monocytes in the blood. We are conducting the trial in the Netherlands and will be enrolling up to 36 healthy subjects. Weexpect to complete enrollment in this Phase 1 trial by the end of second quarter of 2017. We expect to utilize the safety assessment of single doses of SNDX-6352in deciding the starting dose for subsequent clinical trials testing multiple doses of SNDX-6352 as a single agent and in combinations.CollaborationsClinical Collaborations in Immuno-OncologyMerck—MSD International GmbHIn March 2015, we entered into a clinical trial collaboration and supply agreement with MSD International GmbH, an affiliate of Merck, under which wewill conduct a clinical trial evaluating entinostat in combination with Merck’s drug Keytruda in patients with NSCLC and melanoma. We are the sponsor of theclinical trial. Merck will supply Keytruda for use in the clinical trial. Neither party will have any obligation to reimburse any 23Table of Contentscosts incurred by the other party, except that a party may be required to reimburse the manufacturing costs of the other party upon certain early termination events.To the extent any inventions arise from the clinical trial, each party will solely own inventions relating to its drug alone, and the parties will jointly own anyinventions relating to the combination of the two drugs. In most cases, clinical data from the trial will be jointly owned. However, each party will separatelyanalyze clinical samples obtained from trial participants, and each party will solely own the sample analysis data that it generates.Either party may terminate the agreement for the other party’s uncured material breach. In addition, either party may terminate the agreement if it believesthat there is imminent danger to patients in the clinical trial, or if a regulatory authority takes an action that prevent such party from supplying its drug, or if suchparty decides to discontinue development of its drug. Merck may terminate the agreement if we fail to make any changes to the clinical trial protocol that arereasonably requested by Merck to address a perceived safety issue or if we undergo a change of control with a company that is clinically developing or marketing adrug having the same mechanism of action as Keytruda .GenentechIn August 2015, we entered into a combination study collaboration agreement with Genentech under which we will conduct a clinical trial evaluatingentinostat in combination with Genentech’s drug atezolizumab in patients with TNBC. We will be the sponsor of the clinical trial. Genentech will supplyatezolizumab for use in the clinical trial. Each party will perform its obligations under the agreement at its own expense, including its internal costs.To the extent any inventions arise from the clinical trial, each party will solely own inventions relating to its drug alone, and the parties will jointly own anyinventions relating to the combination of the two drugs. In most cases, data from the trial will be jointly owned. However, each party will solely own certain sampleanalysis data generated from clinical samples obtained from trial participants.Either party may terminate the agreement for the other party’s uncured material breach. In addition, either party may terminate the agreement if it determinesthat the trial may unreasonably affect patient safety, or if a regulatory authority withdraws the approval to conduct the trial or takes an action that prevent suchparty from supplying its drug, or if the other party or its employees are sanctioned under certain healthcare-related laws, or if such party decides to discontinuedevelopment of its drug.Merck KGaA and PfizerIn December 2015, we entered into a clinical trial collaboration and supply agreement with Merck KGaA and Pfizer under which we will conduct a clinicaltrial evaluating entinostat in combination with an investigational monoclonal antibody, avelumab, in patients with ovarian cancer. Avelumab is being developedcollaboratively by Merck KGaA and Pfizer, which are together treated as a single party for purposes of this agreement. We will be the sponsor of the clinical trial.Merck KGaA and Pfizer will supply avelumab for use in the clinical trial. During the term of the trial or the term of the agreement, whichever is shorter, each partyhas agreed not to initiate any clinical trial in combination with such party’s drug and a third party drug for the treatment of ovarian cancer if the third party drug hasthe same target and mechanism of action as the other party’s drug, subject to certain exceptions.To the extent any inventions arise from the clinical trial, each party will solely own inventions relating to its drug alone, and the parties will jointly own anyinventions relating to the combination of the two drugs. In most cases, data from the trial will be jointly owned. However, each party will solely own certain sampleanalysis data generated from clinical samples obtained from trial participants. 24Table of ContentsEither party may terminate the agreement for the other party’s uncured material breach. In addition, either party may terminate the agreement if it determinesthat the trial may unreasonably affect patient safety, or if a regulatory authority takes an action that prevent such party from supplying its drug, or if such partydecides to discontinue development of its drug. Merck KGaA and Pfizer may also terminate the agreement if we fail to make any changes to the clinical trialprotocol that are reasonably requested by them to address a perceived safety issue.NCI and Investigator CollaborationsCollaborative Research and Development Agreement with the NCI related to EntinostatOur collaboration with the NCI is governed by a cooperative research and development agreement, or CRADA, between us and the NCI. The CRADA wasoriginally signed by Mitsui Pharmaceuticals, Inc., or Mitsui, and was then assigned to Schering AG following Schering AG’s acquisition of Mitsui. In 2007,Schering AG (then known as Bayer Schering Pharma AG) agreed to assign the CRADA to us in connection with the execution of a license, development andcommercialization agreement, or the Bayer license agreement, with Bayer.Under the CRADA, as amended, the NCI sponsors clinical studies on entinostat using researchers at the NCI as well as NCI-funded researchers at otherinstitutions, including ECOG-ACRIN and JHU. In return, we receive access to the data generated in these clinical studies, and we are obligated to supply theclinical trial sites with sufficient quantities of entinostat. Additionally, we are required to make an annual payment to a particular NCI laboratory to help supportcertain research studies related to this and other clinical trial. We have no other payment obligations under the CRADA.We own any intellectual property generated in the course of the collaboration with the NCI, or Collaboration IP, to the extent that Collaboration IP isgenerated by our employees. We also have an exclusive option to obtain an exclusive or non-exclusive commercialization license under Collaboration IP generatedby the NCI. With respect to any Collaboration IP that is owned by or licensed to us, we have agreed to grant the United States government a non-exclusive licenseto practice or have practiced this Collaboration IP throughout the world by or on behalf of the government for research or other government purposes.Either party may terminate the CRADA either by mutual consent or unilaterally upon advance written notice to the other party. Absent such earlytermination, the CRADA will expire on May 21, 2017. As we have in the past, we expect to renew the CRADA at that time.Clinical Trial Agreement with Eastern Cooperative Oncology GroupIn March 2014, we entered into a clinical trial agreement with Eastern Cooperative Oncology Group, a contracting entity for ECOG-ACRIN, whichdescribes the parties’ obligations with respect to the NCI-sponsored pivotal Phase 3 clinical trial of entinostat. Under the terms of the clinical trial agreement,ECOG-ACRIN will perform this clinical trial in accordance with the clinical trial protocol and a mutually agreed scope of work. In January 2015, we amended theagreement to provide for additional patient site reimbursement funds, which will be paid based on milestone-based payments. We will provide a fixed level offinancial support for the clinical trial through an upfront payment of $695,000 and a series of time- and milestone-based payments of up to $970,000, and we areobligated to supply entinostat and placebo to ECOG-ACRIN for use in the clinical trial. During the second quarter of 2016, the agreement was amended to provideadditional study activities and the contractual obligation increased by $0.8 million. We have agreed to provide this additional financial support to fund theadditional activities required to ensure that the E2112 clinical trial will satisfy FDA registration requirements. As of December 31, 2016, our aggregate paymentobligations under this agreement are approximately $21.4 million; and our remaining obligations under this agreement were $12.9 million over an estimated periodof approximately four years. During the first quarter of 2017, the agreement was amended to expand the study to include enrollments from Korean sites, and thecontractual obligation increased by $0.5 million. 25Table of ContentsData and inventions from the Phase 3 clinical trial are owned by ECOG-ACRIN. We have access to the data generated in the clinical trial, both directly fromECOG-ACRIN under the clinical trial agreement, as well as from the NCI through our agreement with it. Additionally, ECOG-ACRIN has granted us a non-exclusive license to any inventions or discoveries that are derived from entinostat as a result of its use during the clinical trial, along with a first right to negotiate anexclusive license to any of these inventions or discoveries.Either party may terminate the clinical trial agreement in the event of an uncured material breach by the other party or if the FDA or NCI withdraws theauthorization to perform the clinical trial in the United States. The parties may jointly terminate the clinical trial agreement if the parties agree that safety-relatedissues support termination.Collaborative Research and Development Agreement with the NCI related to Entinostat and SNDX-6352In September 2016, we entered into a collaboration with the NCI related to both entinostat and SNDX-6352 is governed by a CRADA between us and theNCI. Under the CRADA, the NCI sponsors clinical studies on entinostat and SNDX-6352 using researchers at the NCI as well as NCI-funded researchers at otherinstitutions. In return, we receive access to the data generated in these clinical studies, and we are obligated to supply the clinical trial sites with sufficient quantitiesof entinostat and SNDX-6352. Additionally, we are required to make an annual payment to a particular NCI laboratory to help support certain research studiesrelated to this and other clinical trial. We have no other payment obligations under the CRADA.We own all intellectual property generated in the course of the collaboration with the NCI, or 6352 Collaboration IP, to the extent that 6352 Collaboration IPis generated by our employees. We also have an exclusive option to obtain an exclusive or non-exclusive commercialization license under 6352 Collaboration IPgenerated by the NCI. With respect to any 6352 Collaboration IP that is owned by or licensed to us, we have agreed to grant the United States government a non-exclusive license to practice or have practiced this 6352 Collaboration IP throughout the world by or on behalf of the government for research or other governmentpurposes.Investigator CollaborationsWe have collaborated with a limited number of third parties on the clinical development of entinostat and SNDX-6352. For example, we have suppliedentinostat for use in investigator-sponsored clinical trials conducted at JHU and we plan to enter into similar arrangements with other hospitals and medical centersin the future. Investigator-sponsored clinical trials are generally performed under an IND application filed by the investigator or his or her institution. To date, oursole obligation with respect to these investigator-sponsored clinical trials has been to supply entinostat for use in the trials.License AgreementKyowa Hakko KirinIn December 2014, we entered into a license, development and commercialization agreement with Kyowa Hakko Kirin Co., Ltd., or KHK, under whichKHK received an exclusive license under our intellectual property rights to develop and commercialize entinostat in Japan and Korea. This license includes asublicense under the rights we received under the Bayer license agreement. If we acquire or develop any other anti-cancer drug that, like entinostat, is a selectiveinhibitor of Class 1 HDAC, such drug will be included in this license as well. We will manufacture and supply entinostat to KHK during the term of the agreement,and such obligation may continue for a longer period if KHK continues to sell entinostat following expiration of the agreement or termination of the agreement forour breach. During the term of the agreement, subject to certain exceptions, each party is prohibited from commercializing in the Japan and Korea any otherselective inhibitor of Class 1 HDACs for the same indication as entinostat, with all forms of cancer being treated as the same indication. 26Table of ContentsWe received an upfront license fee of $17.5 million, and KHK purchased 536,049 shares of our Series B-1 Preferred Stock for an aggregate price ofapproximately $7.5 million. We are eligible to receive up to $50.0 million in development and regulatory milestone payments and up to $25.0 million in salesmilestone payments. KHK will pay us a transfer price for the supply of entinostat as well as royalties on net sales of entinostat above a specified threshold eachcalendar year by KHK, its affiliates and sublicensees in the low single digits. Royalty payment obligations will be payable in each country in the KHK territoryuntil the later to occur of (i) the date that all valid claims of the last effective license patent in such country expires or is abandoned, withheld or otherwiseinvalidated and (ii) 15 years from the date of first commercial sale of entinostat in such country. Any payments owed to Bayer as a result of KHK’s developmentand commercialization of entinostat in the KHK territory will be made by us out of the payments we receive from KHK.The agreement with KHK will expire with respect to each country in the KHK territory upon the expiration of all royalty payment obligations in suchcountry. In addition, we may terminate the agreement in its entirety upon written notice to KHK if KHK or any affiliate commences any action or proceeding thatchallenges the validity, enforceability or scope of any licensed patent in the KHK territory. KHK may terminate the agreement in its entirety for convenience at anytime upon advance notice to us. Either party may terminate the agreement for the other party’s uncured material breach, or bankruptcy or related actions orproceedings. If we commit an uncured material breach of certain provisions of the agreement, KHK may, instead of terminating the agreement, elect to continue theagreement in full force and effect except certain payments to us will be reduced.Sales and MarketingWe intend to build a commercial infrastructure to support sales of entinostat and SNDX-6352 in the United States. Our targeted sales force will focus on awell-defined group of medical oncologists, primarily in the non-hospital and academic settings, who are responsible for the care and treatment of cancer patients.We expect to manage sales, marketing and distribution through internal resources and third-party relationships. While we may commit significant financial andmanagement resources to commercial activities, we would also consider collaborating with one or more pharmaceutical companies to enhance our commercialcapabilities. Outside the United States, we plan to rely on our current partners and may seek additional pharmaceutical partners for sales and marketing activities.ManufacturingWe do not own or operate manufacturing facilities for the production of entinostat or SNDX-6352, and we do not have plans to develop our ownmanufacturing operations in the foreseeable future. We currently rely on third-party contract manufacturers for all of our required raw materials, activepharmaceutical ingredients and finished product for our preclinical research and clinical trials. We do not have long-term agreements with any of these third parties.We also do not have any current contractual relationship for the manufacture of commercial supplies. If entinostat or SNDX-6352 is approved by any regulatoryagency, we intend to enter into agreements with a third-party contract manufacturer and one or more backup manufacturers for the commercial production of suchproduct. Development and commercial quantities of any products that we develop will need to be manufactured in facilities, and by processes, that comply with therequirements of the FDA and the regulatory agencies of other jurisdictions in which we are seeking approval.CompetitionThe pharmacologic treatment of NSCLC, melanoma, ovarian cancer and TNBC patients includes chemotherapies and therapies targeting specific genemutations. More recently, immune checkpoint inhibitors have been approved for NSCLC and melanoma and are under investigation for ovarian cancer and TNBC.In October 2015, the FDA approved for the first time the combination of two immuno-oncology drugs, Opdivo and Yervoy , for the treatment of melanoma. Thereare currently numerous drugs undergoing active clinical investigation. We believe that if entinostat in combination with Keytruda , atezolizumab or avelumab were 27Table of Contentsapproved for the treatment of NSCLC, melanoma, TNBC or ovarian cancer, it would face competition from these standard-of-care approaches and otherinvestigational drugs being tested in combination with any of these approaches.If entinostat in combination with Aromasin were approved for treatment of advanced HR+, HER2- breast cancer, it could face competition from othertherapies recently approved for use in combination with hormone therapy in this population, including Ibrance developed by Pfizer, Afinitor developed byNovartis, and other therapies currently in Phase 3 clinical development such as abemaciclib being developed by Eli Lilly and Company, and ribociclib andbuparlisib both of which are being developed by Novartis.Many of our existing or potential competitors have substantially greater financial, technical and human resources than we do and significantly greaterexperience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of products and the commercialization of thoseproducts. Our competitors may be more successful than we may be in obtaining FDA approval for drugs and achieving widespread market acceptance. Ourcompetitors’ drugs may be more effective, or more effectively marketed and sold, than any drug we may commercialize and may render our product candidatesobsolete or non-competitive before we can recover the expenses of developing and commercializing any of our product candidates. Our competitors may alsoobtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours. We anticipate that we will face intense andincreasing competition as new drugs enter the market and advanced technologies become available.We expect any treatments that we develop and commercialize to compete on the basis of, among other things, efficacy, safety, convenience of administrationand delivery, price and the availability of reimbursement from government and other third-party payors.Intellectual PropertyPatents and Property RightsThrough licensed intellectual property and our owned intellectual property, we seek patent protection in the United States and internationally for entinostatand SNDX-6352, its methods of use and processes for its manufacture, as well as for other technologies, where appropriate. Our policy is to actively seek to protectour proprietary position by, among other things, filing patent applications in the United States and abroad claiming our proprietary technologies that are importantto the development of our business. We also rely on trade secrets, know-how, continuing technological innovation and in-licensing opportunities to develop andmaintain our proprietary position.We cannot be sure that patents will be granted with respect to any of our owned or licensed pending patent applications or with respect to any patentapplications filed by us or our licensors in the future, nor can we be sure that any of our existing owned or licensed patents or any patents that may be granted to usor to our licensors in the future will protect our technology. Our success will depend significantly on our ability to obtain and maintain patent and other proprietaryprotection for the technologies that we consider important to our business, defend our patents, preserve the confidentiality of our trade secrets, operate our businesswithout infringing the patents and proprietary rights of third parties, and prevent third parties from infringing our proprietary rights.Entinostat Patent PortfolioWe strive to protect entinostat with multiple layers of patents. As of December 31, 2016, our portfolio included two owned U.S. provisional patentapplications, two owned pending U.S. non-provisional patent applications one granted non-U.S. patent and 19 non-U.S. pending patent applications (including fourpending international patent applications under the Patent Cooperation Treaty, or PCT). Also, we have filed national phase applications in the Eurasia RegionalPatent Office, Ukraine and Georgia based on our owned PCT application directed to treatment of selected breast cancer patients with a combination of entinostatand 28Table of ContentsAromasin . We have assigned our rights to the application we filed in the Eurasia Regional Patent Office to Domain Russia Investments Limited, or DRI. We havealso assigned our rights to the applications we filed in Ukraine and Georgia to NovaMedica LLC, or NovaMedica. We have also filed national phase applicationsbased on our owned PCT application directed to treatment of selected breast cancer patients with the combination of entinostat and Aromasin in the U.S. Patent andTrademark Office, or USPTO, the European Patent Office, or EPO, China, India, Australia, Canada, Japan, South Korea, South Africa, Brazil and Mexico. Ourowned entinostat patent portfolio includes pending U.S. patent applications directed to methods of treating cancer patients by administration of entinostat accordingto selected dosing regimens, methods of treating cancer patients by administration of entinostat in combination with an HER2 inhibitor and methods of treatinglung cancer patients by administration of entinostat in combination with an EGFR inhibitor. Our owned pending U.S. provisional and PCT applications relate totreatments with entinostat combined with anti PD-1 or anti PD-L1 antibodies. If issued, patents based on our owned pending U.S. applications and non-U.S. filingsbased on our owned PCT application would expire between April 2029 and December 2036.The patent portfolio we licensed from Bayer contains a number of issued U.S. and foreign patents as well as patent applications pending outside the UnitedStates. A number of the patents and patent applications we licensed from Bayer are directed to entinostat while other patents and patent applications are directed tocompounds other than entinostat. As of December 31, 2016, the portfolio we licensed from Bayer included seven issued U.S. patents, 62 granted non-U.S. patentsand 17 patent applications pending in non-U.S. patent offices. For example, the portfolio we licensed from Bayer includes reissue U.S. Patent RE39,754, whichcovers a genus of benzamide compounds including entinostat or SNDX-275. RE39,754 is a composition of matter patent having an initial term expiring inSeptember 2017.The portfolio we licensed from Bayer also includes U.S. Patent 7,973,166, or the ’166 patent, which covers a crystalline polymorph of entinostat which isreferred to as crystalline polymorph B, the crystalline polymorph used in the clinical development of entinostat. Many compounds can exist in different crystallineforms. A compound which in the solid state may exhibit multiple different crystalline forms is called polymorphic, and each crystalline form of the same chemicalcompound is termed a polymorph. A new crystalline form of a compound may arise, for example, due to a change in the chemical process or the introduction of animpurity. Such new crystalline forms may be patented. By comparison, the U.S. Patent RE39,754, which expires in September 2017, covers the chemical entity ofentinostat and any crystalline or non-crystalline form of entinostat. On March 7, 2014, our licensor Bayer applied for reissue of the ‘166 patent. The reissueapplication sought to add three additional inventors to the ‘166 patent. The reissue was granted as RE45,499 on April 28, 2015, at which time the original ‘166patent was surrendered. The reissue patent has the same force and effect as the original ‘166 patent and the same August 2029 expiration date.Of the 62 foreign-granted patents we licensed from Bayer, 26 are foreign counterparts of the ‘166 patent (now RE45,499) that cover crystalline polymorph B,the granted European patent comprises 37 national countries that all been validated, and the granted Eurasian patent comprises nine countries that have all beenvalidated. Likewise, 15 of the 17 pending foreign applications are counterparts of the ‘166 crystalline polymorph B patent. Other patents and patent applications inthe licensed Bayer portfolio cover methods of treatment by administration of entinostat. For example, U.S. Patent 7,317,028, which expires in October 2017, coversmethods of treating selected cancers by administration of entinostat; U.S. Patent 7,687,525, which also expires in September 2017, covers methods of treatingautoimmune disease by administration of entinostat; U.S. Patent 6,320,078, which expires in July 2019, covers methods of manufacturing entinostat; U.S. PatentNo. 8,026,239, which expires in September 2017, covers methods of treating certain malignant tumors by administration of a compound within a subgenus ofbenzamide compounds including entinostat; U.S. Patent RE40,703, which expires in September 2017, covers a subgenus of benzamide compounds that does notinclude entinostat; and U.S. Patent 6,794,392, which expires in September 2017, covers a subgenus of benzamide compounds that does not include entinostat. 29Table of ContentsSNDX-6352 Patent PortfolioWe have also in-licensed from UCB patent portfolio directed to SNDX-6352, an IND-ready anti-CSF-1R monoclonal antibody. As of December 31, 2016,the SNDX-6352 composition-of-matter patent portfolio included one pending U.S. non-provisional patent application, one granted non-U.S. patent and 38 non-U.S.pending patent applications. If issued, patents based on the in-licensed pending U.S. application and non-U.S. applications covering SNDX-6352 would expire inAugust 2034. Our in-licensed patent portfolio also includes pending U.S. and non-U.S. patent applications directed to methods for the treatment and/or prophylaxisof fibrotic disease by administration of an inhibitor of CSF-1R activity, methods for the treatment and/or prophylaxis of inflammatory bowel disease, or IBD, byadministration of an inhibitor of CSF-1R activity, and liquid pharmaceutical compositions of anti-CSF-1R antibodies. If issued, patents based on these pendingapplications would expire between November 2024 and February 2036. Further, the in-licensed portfolio includes three non-U.S. patents directed to methods oftreating solid tumors by administration of an inhibitor of CSF-1R activity. The three patents will expire in October 2024.The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file, thepatent term is 20 years from the date of filing the earliest non-provisional application or PCT application.In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the USPTO ingranting a patent, or may be shortened if a patent is terminally disclaimed over an earlier-filed patent. The term of a patent that covers an approved drug may alsobe eligible for patent term extension, which permits patent term restoration as compensation for the patent term lost during the development and regulatory reviewprocess. To obtain a patent extension in the United States, the term of the relevant patent must not have expired before the extension application, the patent cannothave been extended previously under this law, an application for extension must be submitted, the product must be subject to regulatory review prior to itscommercialization, and the permission for the commercial marketing or use of the product after such regulatory review period is the first permitted commercialmarketing or use of the product. If our future products contain active ingredients which have not been previously approved, we may be eligible for a patent termextension in the United States. In the United States, we expect to seek extension of patent terms under the Drug Price Competition and Patent Term Restoration Actof 1984, which permits a patent term extension of up to five years beyond the expiration of the patent for patent claims covering a new chemical entity. If patentextensions are available to us outside of the United States, we would expect to file for a patent term extension in applicable jurisdictions.In-Licensed Intellectual PropertyLicense, Development and Commercialization Agreement with BayerIn March 2007, we entered into the Bayer license agreement pursuant to which we obtained a worldwide, exclusive license to develop and commercializeentinostat and any other products containing the same active ingredient. The Bayer license agreement, as amended, permits us to use entinostat or other licensedproducts for the treatment of any human disease, and we are obligated to use commercially reasonable efforts to develop, manufacture and commercialize licensedproducts for all commercially reasonable indications. Initially, Bayer manufactured and supplied our requirements of entinostat, but effective May 2012,manufacturing rights and responsibility for entinostat was transferred to us, by mutual agreement of the parties.In connection with the execution of the Bayer license agreement, we were obligated to pay Bayer an upfront license fee of $2.0 million. We are alsoobligated to pay up to approximately $50.0 million in the aggregate upon obtaining certain milestones in the development and marketing approval of entinostat,assuming that we pursue at least two different indications for entinostat or any other licensed product. In June 2014, we achieved a research and developmentmilestone, and in accordance with the terms of the Bayer license agreement, we paid $2.0 million to Bayer. 30Table of ContentsWe are also obligated to pay Bayer $100.0 million in aggregate sales milestones, and a tiered single-digit royalty on net sales by us, our affiliates andsublicensees of entinostat and any other licensed products under the Bayer license agreement. We are obligated to pay Bayer these royalties on a country-by-country basis for the life of the relevant licensed patents covering such product or 15 years after the first commercial sale of such product in such country,whichever is longer. We cannot determine the date on which our royalty payment obligations to Bayer would expire because no commercial sales of entinostat haveoccurred and the last-to-expire relevant patent covering entinostat in a given country may change in the future.The Bayer license agreement will remain in effect until the expiration of our royalty obligations under the agreement in all countries. Upon expiration of theagreement our licenses become fully paid-up and irrevocable. Either party may terminate the Bayer license agreement in its entirety or with respect to certaincountries in the event of an uncured material breach by the other party. Either party may terminate the Bayer license agreement if voluntary or involuntarybankruptcy proceedings are instituted against the other party, if the other party makes an assignment for the benefit of creditors, or upon the occurrence of otherspecific events relating to the insolvency or dissolution of the other party. Bayer may terminate the Bayer license agreement if we seek to revoke or challenge thevalidity of any patent licensed to us by Bayer under the Bayer license agreement or if we procure or assist a third party to take any such action.License Agreement with UCBIn July 2016, we entered into a license agreement with UCB, or the UCB license agreement, under which UCB granted us a worldwide, sublicenseable,exclusive license to UCB6352, which the Company refers to as SNDX-6352, an IND-ready anti-CSF-1R monoclonal antibody. The UCB license agreementpermits us to use SNDX-6352 or other licensed products for all human uses, including treatment, prevention and diagnostic uses, in all indications, diseases,conditions or disorders, and we are obligated to use commercially reasonable efforts to develop, obtain regulatory approval and commercialize a certain licensedproduct.In consideration for the license grant, we made a nonrefundable upfront payment of $5.0 million to UCB in the third quarter of 2016. Additionally, subject tothe achievement of certain milestone events, we may be required to pay UCB up to $119.5 million in one-time development and regulatory milestone paymentsover the term of the UCB license agreement. In the event that we or any of our affiliates or sublicensees commercializes SNDX-6352, we will also be obligated topay UCB low double-digit royalties on sales, subject to reduction in certain circumstances, as well as up to an aggregate of $250.0 million in potential one-time,sales-based milestone payments based on achievement of certain annual sales thresholds. Under certain circumstances, we may be required to share a percentage ofnon-royalty income from sublicensees, subject to certain deductions, with UCB. We are solely responsible for the development and commercialization of SNDX-6352, except that UCB is performing a limited set of transitional chemistry, manufacturing and control tasks related to SNDX-6352.Each party may terminate the UCB license agreement for the other party’s uncured material breach or insolvency; and we may terminate the UCB licenseagreement at will at any time upon advance written notice to UCB. UCB may terminate the UCB license agreement if we or any of our affiliates or sublicenseesinstitutes a legal challenge to the validity, enforceability, or patentability of the licensed patent rights. Unless terminated earlier in accordance with its terms, theUCB license agreement will continue on a country-by-country and product-by-product basis until the later of: (i) the expiration of all of the licensed patent rights insuch country; (ii) the expiration of all regulatory exclusivity applicable to the product in such country; and (iii) 10 years from the date of the first commercial saleof the product in such country.Confidential Information and Inventions Assignment AgreementsWe require our employees and consultants to execute confidentiality agreements upon the commencement of employment, consulting or collaborativerelationships with us. These agreements provide that all confidential 31Table of Contentsinformation developed or made known during the course of the relationship with us be kept confidential and not disclosed to third parties except in specificcircumstances.In the case of employees, the agreements provide that all inventions resulting from work performed for us, utilizing our property or relating to our businessand conceived or completed by the individual during employment shall be our exclusive property to the extent permitted by applicable law. Our consulting andservice agreements also provide for assignment to us of any intellectual property resulting from services performed for us.Government Regulation and Product ApprovalUnited States Government RegulationIn the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and related regulations. Drugs are also subject toother federal, state and local statutes and regulations. The FDA and comparable regulatory agencies in state and local jurisdictions impose substantial requirementsupon, among other things, the testing, development, manufacture, quality control, safety, purity, potency, labeling, storage, distribution, record keeping andreporting, approval, import and export, advertising and promotion, and postmarket surveillance of drugs.The FDA’s policies may change and additional government regulations may be enacted that could prevent or delay regulatory approval of any productcandidates, product or manufacturing changes, additional disease indications, or label changes. We cannot predict the likelihood, nature or extent of governmentregulation that might arise from future legislative or administrative action.Failure to comply with the applicable United States regulatory requirements at any time during the product development process, approval process or afterapproval may subject an applicant to administrative or judicial enforcement actions. These actions could include the suspension or termination of clinical trials bythe FDA, the FDA’s refusal to approve pending applications or supplemental applications, withdrawal of an approval, warning or untitled letters, product recalls,product seizures, total or partial suspension of production or distribution, import detention, injunctions, fines, civil penalties or criminal prosecution. Any suchadministrative or judicial action could have a material adverse effect on us.Although this discussion focuses on regulation in the United States, we anticipate seeking approval for and marketing of our product candidates in othercountries. Generally, our product candidates will be subject to regulation in other countries that is similar in nature and scope as those imposed in the United States,although there can be important differences. In Europe, for example, some significant aspects of regulation are addressed in a centralized way through the EuropeanMedicines Agency, but country-specific regulation remains essential in many respects.Drug Development ProcessThe process required by the FDA before drugs may be marketed in the United States generally involves the following: • completion of extensive preclinical laboratory tests and animal studies in accordance with applicable regulations, including the FDA’s good laboratorypractice, or GLP regulations; • submission of an IND application which must become effective before clinical trials may begin; • performance of adequate and well-controlled human clinical trials in accordance with applicable regulations, including the FDA’s current good clinicalpractice, or GCP, regulations to establish the safety and efficacy of the proposed drug for its intended use or uses; 32Table of Contents • submission to the FDA of an NDA for a new drug product; • a determination by the FDA within 60 days of its receipt of an NDA to accept an NDA for filing and review; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the drug is produced to assess compliance with theFDA’s current Good Manufacturing Practices, or cGMP, regulations to assure that the facilities, methods and controls are adequate to preserve thedrug’s identity, strength, quality and purity; • potential FDA audit of the preclinical and/or clinical trial sites that generated the data in support of an NDA; and • FDA review and approval of an NDA prior to any commercial marketing or sale of the drug in the United States.Preclinical TestingBefore testing any compounds with potential therapeutic value in humans, the drug candidate enters the preclinical testing stage. Preclinical tests includelaboratory evaluations of product chemistry and formulation, as well as animal studies to assess the potential safety, toxicity profile and activity of the drugcandidate. The conduct of the preclinical tests must comply with federal regulations and requirements including GLPs.IND ApplicationPrior to commencing the first clinical trial in humans, an IND must be submitted to the FDA, and the IND must become effective. A sponsor must submitpreclinical testing results to the FDA as part of the IND and the FDA must evaluate whether there is an adequate basis for testing the drug in humans. The INDautomatically becomes effective 30 days after receipt by the FDA unless the FDA within the 30-day time period raises concerns or questions about the submitteddata or the conduct of the proposed clinical trial and places the IND on clinical hold. In such case, the IND application sponsor must resolve any outstandingconcerns with the FDA before the clinical trial may begin. A separate submission to the existing IND application must be made for each successive clinical trial tobe conducted during product development. Further, an independent Institutional Review Board, or IRB, for each site proposing to conduct the clinical trial mustreview and approve the protocol and informed consent for any clinical trial before it commences at that site. Informed consent must also be obtained from eachstudy subject. Regulatory authorities, an IRB, a data safety monitoring board or the trial sponsor may suspend or terminate a clinical trial at any time on variousgrounds, including a finding that the participants are being exposed to an unacceptable health risk.Clinical TrialsHuman clinical trials are typically conducted in three sequential phases that may overlap: • Phase 1—The drug is initially given to healthy human subjects or patients and tested for safety, dosage tolerance, absorption, metabolism, distributionand excretion, the side effects associated with increasing doses, and if possible, to gain early evidence on effectiveness. • Phase 2—The drug is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate theefficacy of the product for specific targeted diseases or conditions and to determine dosage tolerance, optimal dosage and dosing schedule. • Phase 3—Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety at geographically dispersed clinical trial sites. Theseclinical trials are intended to establish the overall benefit-risk ratio of the product and to provide an adequate basis for product approval by the FDA. 33Table of ContentsPost-approval studies, or Phase 4 clinical trials, may be conducted after initial marketing approval. These studies may be required by the FDA as a conditionof approval and are used to gain additional experience from the treatment of patients in the intended therapeutic indication. The FDA also has express statutoryauthority to require post-market clinical studies to address safety issues.The FDCA permits the FDA and an IND sponsor to agree in writing on the design and size of clinical studies intended to form the primary basis of a claim ofeffectiveness in an NDA. An SPA agreement is not a guarantee of product approval by the FDA or approval of any permissible claims about the product. The FDAretains significant latitude and discretion in interpreting the terms of the SPA agreement and the data and results from any study that is the subject of the SPAagreement. In particular, the SPA agreement is not binding on the FDA if previously unrecognized public health concerns later come to light, other new scientificconcerns regarding product safety or efficacy arise, the IND sponsor fails to comply with the protocol agreed upon, or the relevant data, assumptions, orinformation provided by the IND sponsor when requesting an SPA agreement change, are found to be false statements or misstatements, or are found to omitrelevant facts. An SPA agreement may not be changed by the sponsor or the FDA after the trial begins except with the written agreement of the sponsor and theFDA, or if the FDA determines that a substantial scientific issue essential to determining the safety or effectiveness of the drug was identified after the testingbegan.Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and written IND safety reports must be submitted tothe FDA and the investigators for serious and unexpected adverse events or any finding from tests in laboratory animals that suggests a significant risk for humansubjects. Phase 1, Phase 2 and Phase 3 clinical trials may fail to be completed successfully within any specified period, if at all. The FDA, the IRB or the sponsormay suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to anunacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted inaccordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients. Additionally, some clinical trials are overseenby an independent group of qualified experts organized by the clinical trial sponsor, known as a data monitoring board or committee. This group providesauthorization for whether or not a trial may move forward at designated checkpoints based on access to certain data from the study. A sponsor may also suspend orterminate a clinical trial based on evolving business objectives and/or competitive climate.Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry andphysical characteristics of the drug as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.The manufacturing process must be capable of consistently producing quality batches of the drug candidate and, among other things, must include developedmethods for testing the identity, strength, quality and purity of the finished drug product. Additionally, appropriate packaging must be selected and tested andstability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf life.FDA Review and Approval ProcessesIn order to obtain approval to market a drug in the United States, a marketing application must be submitted to the FDA that provides data establishing to theFDA’s satisfaction the safety and effectiveness of the investigational drug for the proposed indication. Each NDA submission requires a substantial user feepayment unless a waiver or exemption applies. The application includes all relevant data available from pertinent nonclinical studies and clinical trials, includingnegative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls andproposed labeling, among other things. Data can come from company-sponsored clinical trials intended to test the safety and effectiveness of a use of a product, orfrom a number of alternative sources, including studies initiated by investigators. 34Table of ContentsThe FDA will initially review an NDA for completeness before it accepts it for filing. The FDA has 60 days from its receipt of an NDA to determine whetherthe application will be accepted for filing based on the agency’s threshold determination that the application is sufficiently complete to permit substantive review. Ifit is not, the FDA may refuse to file an NDA and request additional information, in which case the application must be resubmitted with the supplementalinformation, and review of the application is delayed. After an NDA submission is accepted for filing, the FDA reviews an NDA to determine, among other things,whether the proposed product is safe and effective for its intended use, and whether the product is being manufactured in accordance with cGMP to assure andpreserve the product’s identity, strength, quality and purity. The FDA may refer applications for novel drug products or drug products that present difficultquestions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendationas to whether the application should be approved and, if so, under what conditions. The FDA is not bound by the recommendations of an advisory committee, but itconsiders such recommendations carefully when making decisions.Upon the filing of an NDA, the FDA may grant a priority review designation to a product, which sets the target date for FDA action on the application at 6months, rather than the standard 10 months. Priority review is given for drug that treats a serious condition and, if approved, would provide a significantimprovement in safety or effectiveness. Priority review designation does not change the scientific or medical standard for approval or the quality of evidencenecessary to support approval. Whether priority or standard review applies, an additional 60 days is added to the target date for FDA action for new molecularentities.After the FDA completes its initial review of an NDA, it will communicate to the sponsor that the drug will either be approved, or it will issue a completeresponse letter to communicate that an NDA will not be approved in its current form and inform the sponsor of changes that must be made or additional clinical,nonclinical or manufacturing data that must be received before the application can be approved, with no implication regarding the ultimate approvability of theapplication.Before approving an NDA, the FDA will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless itdetermines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the productwithin required specifications. Additionally, before approving an NDA, the FDA may inspect one or more clinical sites to assure compliance with GCP. If the FDAdetermines the application, manufacturing process or manufacturing facilities are not acceptable, it typically will outline the deficiencies and often will requestadditional testing or information. This may significantly delay further review of the application. If the FDA finds that a clinical site did not conduct the clinical trialin accordance with GCP, the FDA may determine the data generated by the clinical site should be excluded from the primary efficacy analyses provided in anNDA. Additionally, notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfythe regulatory criteria for approval.Even if a product candidate receives regulatory approval, the approval may be limited to specific disease states, patient populations and dosages, or mightcontain significant limitations on use in the form of warnings, precautions or contraindications, or in the form of onerous risk management plans, restrictions ondistribution, or post-marketing study requirements. For example, the FDA may require Phase 4 testing, which involves clinical trials designed to further assess adrug’s safety and effectiveness and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized. TheFDA may also determine that a risk evaluation and mitigation strategy, or REMS, is necessary to assure the safe use of the drug. If the FDA concludes a REMS isneeded, the sponsor of an NDA must submit a proposed REMS, and the FDA will not approve an NDA without an approved REMS, if required. Depending on theFDA’s evaluation of a drug’s risks, a REMS may include medication guides, physician communication plans, or elements to assure safe use, such as restricteddistribution requirements, patient registries and other risk minimization tools. Following approval of an NDA with a REMS, the sponsor is responsible formarketing the drug in compliance with the REMS and must submit periodic REMS assessments to the FDA. 35Table of ContentsFurther, even after regulatory approval is obtained, later discovery of previously unknown problems with a product may result in restrictions on the productor even complete withdrawal of the product from the market. In addition, we cannot predict what adverse governmental regulations may arise from future U.S. orforeign governmental action.Expedited Review ProgramsThe FDA has a Fast Track program that is intended to expedite or facilitate the process for reviewing new drug products that meet certain criteria.Specifically, new drugs are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate thepotential to address unmet medical needs for the disease or condition. Fast Track designation applies to the combination of the product and the specific indicationfor which it is being studied. For a Fast Track product, the FDA may consider for review sections of an NDA on a rolling basis before the complete application issubmitted, if the sponsor provides a schedule for the submission of the sections of an NDA, the FDA agrees to accept sections of an NDA and determines that theschedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of an NDA.Any product submitted to the FDA for approval, including a product with a Fast Track designation, may also be eligible for other types of FDA programsintended to expedite development and review, such as priority review and accelerated approval. Drug products studied for their safety and effectiveness in treatingserious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on a surrogate endpoint thatis reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonablylikely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition andthe availability or lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a drug product receiving accelerated approvalperform adequate and well-controlled post-marketing clinical studies. In addition, the FDA requires as a condition for accelerated approval pre-approval ofpromotional materials, which could adversely impact the timing of the commercial launch of the product.The FDA may also expedite the review of a drug designated as a breakthrough therapy, which is a drug that is intended, alone or in combination with one ormore other drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantialimprovement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Asponsor may request the FDA to designate a drug as a breakthrough therapy at the time of, or any time after, the submission of an IND application for the drug. Thedesignation of a drug as a breakthrough therapy provides the same benefits as are available under the Fast Track program, as well as intensive FDA guidance on theproduct’s development program. If the FDA designates a drug as a breakthrough therapy, it must take actions appropriate to expedite the development and reviewof the application, which may include holding meetings with the sponsor and the review team throughout the development of the drug; providing timely advice to,and interactive communication with, the sponsor regarding the development of the drug to ensure that the development program to gather the nonclinical andclinical data necessary for approval is as efficient as practicable; involving senior managers and experienced review staff, as appropriate, in a collaborative, cross-disciplinary review; assigning a cross-disciplinary project lead for the FDA review team to facilitate an efficient review of the development program and to serve asa scientific liaison between the review team and the sponsor; and taking steps to ensure that the design of the clinical trials is as efficient as practicable, whenscientifically appropriate, such as by minimizing the number of patients exposed to a potentially less efficacious treatment. The FDA may rescind a BreakthroughTherapy designation in the future if further clinical development later shows that the criteria for designation are no longer met.Fast Track designation, priority review, accelerated approval and Breakthrough Therapy designation do not change the standards for approval, but mayexpedite the development or review process. 36Table of ContentsHatch-Waxman ActUnder the Drug Price Competition and Patent Term Restoration Act of 1984, known as the “Hatch-Waxman Act,” Congress created an abbreviated FDAreview process for generic versions of approved pioneer (brand name) NDA products. In considering whether to approve such a generic drug product submittedunder an Abbreviated New Drug Application, or ANDA, the FDA generally requires that an ANDA applicant demonstrate that the proposed generic drug product’sactive ingredient, strength, dosage form, and route of administration are the same as that of the reference product, that the two drugs are bioequivalent, that anyimpurities in the proposed product do not affect the product’s safety or effectiveness, and that its manufacturing processes and methods ensure the consistentpotency and purity of its proposed product. Similarly, section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act provides a reduced burden of demonstratingsafety and effectiveness for an NDA for a product that is similar, but not identical, to the pioneer product.The Hatch Waxman Act requires NDA applicants and NDA holders to provide certain information about patents related to the drug for listing in itspublication Approved Drug Products with Therapeutic Equivalence Evaluations, referred to as the Orange Book. ANDA and 505(b)(2) applicants who seek toreference a pioneer drug must then certify regarding each of the patents listed with the FDA for the reference product. A certification that a listed patent is invalidor will not be infringed by the marketing of the applicant’s product is called a “Paragraph IV certification.”The Hatch Waxman Act also provides periods of regulatory exclusivity for certain pioneer products during which FDA review or approval of an ANDA or505(b)(2) application is precluded. If the pioneer product is a New Chemical Entity, or NCE, the FDA is precluded for a period of five years from accepting forreview an ANDA or 505(b)(2) application for the same chemical entity. Under NCE exclusivity, the FDA may accept an ANDA or 505(b)(2) application for reviewafter four years, however, if that application contains a Paragraph IV certification challenging one of the pioneer’s listed patents.The Hatch Waxman Act also provides three years of exclusivity for applications containing the results of new clinical investigations (other thanbioavailability studies) essential to the FDA’s approval of new uses of approved products, such as new indications, dosage forms, strengths, or conditions of use.During this three-year exclusivity period, the FDA may review but not approve an ANDA or 505(b)(2) application for a product with the same conditions of use assupported by those new clinical investigations. This exclusivity will not necessarily prohibit the FDA from accepting or approving ANDAs or 505(b)(2)applications for other products containing the same active ingredient.If an ANDA or 505(b)(2) application containing a Paragraph IV certification is accepted for filing by the FDA, the applicant must within 20 days providenotice to an NDA holder and patent owner that the application has been submitted and provide the factual and legal basis for the applicant’s opinion that the patentis invalid or not infringed. An NDA holder or patent owner may then file suit against the ANDA or 505(b)(2) applicant for patent infringement. If a suit is filedwithin 45 days of receiving notice of the Paragraph IV certification, the FDA is precluded from approving the ANDA or 505(b)(2) application for a period of 30months. The 30-month stay generally begins on the date of the receipt of notice by an NDA holder or patent owner. If the pioneer product has NCE exclusivity andthe pioneer files suit against the ANDA or 505(b)(2) application during the fifth year of exclusivity, however, the 30-month stay will not be triggered until fiveyears from the date of the reference drug’s approval. The FDA may approve the proposed product before the expiration of the 30-month stay if a court finds thepatent invalid or not infringed or if the court shortens the period because the parties have failed to cooperate in expediting the litigation.Post-Approval RequirementsIf and when approved, any products manufactured or distributed by us or on our behalf will be subject to continuing regulation by the FDA, includingrequirements for record-keeping, reporting of adverse experiences and submitting annual reports. 37Table of ContentsGood Manufacturing PracticesDrug manufacturers are required to register their facilities with the FDA and certain state agencies, and are subject to periodic unannounced inspections bythe FDA and certain state agencies for compliance with cGMPs, which impose certain quality processes, manufacturing controls and documentation requirementsupon us and our third-party manufacturers in order to ensure that the product is safe, has the identity and strength, and meets the quality and purity characteristicsthat it purports to have. The FDA and certain states also impose requirements on manufacturers and distributors to establish the pedigree of product in the chain ofdistribution, including some states that require manufacturers and others to adopt new technology capable of tracking and tracing product as it moves through thedistribution chain. We cannot be certain that we or our present or future suppliers will be able to comply with the cGMP and other FDA regulatory requirements. Ifour present or future suppliers are not able to comply with these requirements, the FDA may halt our clinical trials, fail to approve any NDA or other application,shut down manufacturing operations or withdraw approval of an NDA for that drug, or we may recall the drug from distribution. Noncompliance with cGMP orother requirements can result in issuance of warning letters, civil and criminal penalties, seizures and injunctive action.Advertising and PromotionThe FDA closely regulates the labeling, marketing and promotion of drugs. While doctors are free to prescribe any drug approved by the FDA for any use, acompany can only make claims relating to safety and efficacy of a drug that are consistent with FDA approval, and the company is allowed to actively market adrug only for the particular use and treatment approved by the FDA. In addition, any claims we make for our products in advertising or promotion must beappropriately balanced with important safety information and otherwise be adequately substantiated. Failure to comply with these requirements can result inadverse publicity, warning letters, corrective advertising, injunctions and potential civil and criminal penalties. Government regulators recently have increased theirscrutiny of the promotion and marketing of drugs.Coverage and ReimbursementIn both domestic and foreign markets, sales of any products for which we may receive regulatory approval will depend in part upon the availability ofcoverage and adequate reimbursement to healthcare providers from third-party payors. Such third-party payors include government health programs, such asMedicare and Medicaid, as well as managed care providers, private health insurers and other organizations. Coverage decisions may depend upon clinical andeconomic standards that disfavor new drug products when more established or lower cost therapeutic alternatives are available. Assuming coverage is granted, thereimbursement rates paid for covered products might not be adequate. Even if favorable coverage status and adequate reimbursement rates are attained, lessfavorable coverage policies and reimbursement rates may be implemented in the future. The marketability of any products for which we may receive regulatoryapproval for commercial sale may suffer if the government and other third-party payors fail to provide coverage and adequate reimbursement to allow us to sellsuch products on a competitive and profitable basis. For example, under these circumstances, physicians may limit how much or under what circumstances theywill prescribe or administer such products, and patients may decline to purchase them. This, in turn, could affect our ability to successfully commercialize ourproducts and impact our profitability, results of operations, financial condition, and future success.In the United States, the European Union and other potentially significant markets for our product candidates, government authorities and third party payorsare increasingly attempting to limit or regulate the price of medical products and services, particularly for new and innovative products and therapies. Suchpressure, along with the increased emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in theEuropean Union, will likely put additional downward pressure on product pricing, reimbursement and usage, which may adversely affect our future product salesand results of operations. These pressures can arise from rules and practices of managed care groups, judicial decisions, governmental laws and regulations relatedto government healthcare programs, healthcare reform, and pharmaceutical coverage and reimbursement policies. 38Table of ContentsThe market for any product candidates for which we may receive regulatory approval will depend significantly on the degree to which these products arelisted on third-party payors’ drug formularies, or lists of medications for which third-party payors provide coverage and reimbursement to the extent products forwhich we may receive regulatory approval are covered under a pharmacy benefit or are otherwise subject to a formulary. The industry competition to be includedon such formularies often leads to downward pricing pressures on pharmaceutical companies. Also, third-party payors may refuse to include a particular brandeddrug on their formularies or otherwise restrict patient access to a branded drug when a less costly generic equivalent or other alternative is available. In addition,because each third-party payor individually approves coverage and reimbursement levels, obtaining coverage and adequate reimbursement is a time-consuming andcostly process. Further, one payor’s determination to provide coverage for a drug product does not assure that other payors will also provide coverage for the drugproduct. We may be required to provide scientific and clinical support for the use of any product to each third-party payor separately with no assurance thatapproval would be obtained, and we may need to conduct expensive pharmacoeconomic studies in order to demonstrate the cost-effectiveness of our products. Wecannot be certain that our product candidates will be considered cost-effective. This process could delay the market acceptance of any product candidates for whichwe may receive approval and could have a negative effect on our future revenues and operating results.Federal and State Fraud and Abuse and Data Privacy and Security Laws and RegulationsIn addition to FDA restrictions on marketing of pharmaceutical products, federal and state laws restrict business practices in the pharmaceutical industry.These laws include anti-kickback and false claims laws and regulations as well as data privacy and security laws and regulations. The federal Anti-KickbackStatute prohibits persons and entities from, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in returnfor purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid orother federal healthcare programs. The term “remuneration” has been broadly interpreted to include anything of value. The Anti-Kickback Statute has beeninterpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers and formulary managers on the other.Although there are a number of statutory exemptions and regulatory safe harbors protecting some common activities from prosecution, the exemptions and safeharbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may besubject to scrutiny if they do not qualify for an exemption or safe harbor. Several courts have interpreted the statute’s intent requirement to mean that if any onepurpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the statute has been violated.The reach of the Anti-Kickback Statute was also broadened by the Patient Protection and Affordable Care Act, as amended by the Health Care and EducationReconciliation Act of 2010, or collectively the Affordable Care Act, which, among other things, amended the intent requirement of the federal Anti-KickbackStatute such that a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation. Inaddition, the Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act or the civil monetary penalties statute, which imposes penaltiesagainst any person who is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is foran item or service that was not provided as claimed or is false or fraudulent.The federal False Claims Act prohibits any person from knowingly presenting, or causing to be presented, a false claim for payment to the federalgovernment or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.A claim includes “any request or demand” for money or property presented to the U.S. government. Several pharmaceutical and other healthcare companies havebeen prosecuted under these laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for theproduct. Other companies have been 39Table of Contentsprosecuted for causing false claims to be submitted because of the companies’ marketing of products for unapproved, and thus non-reimbursable, uses. In addition,the federal Health Insurance Portability and Accountability Act of 1996, and its implementing regulations, or HIPAA, created federal criminal laws that prohibitknowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third party payors, knowingly and willfully embezzling orstealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealingor covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcarebenefits, items or services.Many states have similar fraud and abuse statutes or regulations, including, without limitation, laws analogous to the federal Anti-Kickback Statute and thefederal False Claims Act, that apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.Some of these state laws apply to a broader range of conduct and may not have the same exceptions as analogous federal laws. Accordingly, our business will besubject to these provisions as well in the states in which we do business.The federal Physician Payments Sunshine Act, enacted as part of the Affordable Care Act requires applicable manufacturers of drugs, devices, biologics andmedical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to track andannually report to the Centers for Medicare and Medicaid Service, or CMS, payments and other transfers of value provided to physicians and teaching hospitals andcertain ownership and investment interests held by physicians or their immediate family members. If our operations are found to be in violation of any of such lawswe may be subject to penalties, which could adversely affect our ability to operate our business and our financial results.In addition, we may be subject to data privacy and data security regulation by both the federal government and the states in which we conduct our business.HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, imposes specifiedrequirements relating to the privacy, security and transmission of certain individually identifiable health information. HIPAA applies to certain covered entityhealth care providers, health plans and health care clearinghouses as well as their business associates, which are entities that create, receive, maintain or transmitprotected health information in connection with providing a service to or performing an activity for or on behalf of a covered entity. Violations of HIPAA mayresult in civil and/or criminal penalties and state attorneys’ general have authority to file civil actions for damages or injunctions in federal courts to enforce HIPAAand seek attorney’s fees and costs associated with pursuing federal civil actions. Even if we are not directly subject to HIPAA, we could be subject to criminalpenalties if we knowingly obtain or disclose individually identifiable health information maintained by a HIPAA covered entity in a manner not authorized orpermitted by HIPAA. In addition, state laws govern the privacy and security of health information in certain circumstances, many of which differ from each otherin significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. We may also be subject to federal and state laws that govern theprivacy and security of other personal information, including federal and state consumer protection laws, state data security laws, and data breach notification laws.A data breach affecting sensitive personal information, including health information, could result in significant legal and financial exposure and reputationaldamages.Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, it is possible that some of our business activitiescould be subject to challenge, investigation or legal action under one or more of such laws. If our operations are found to be in violation of any of the federal andstate laws described above or any other governmental regulations that apply to us, we may be subject to significant civil, criminal, and administrative penalties,including, without limitation, damages, fines, individual imprisonment, exclusion from participation in government healthcare programs, additional reportingrequirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws,and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. To theextent that any of our product candidates receive approval and are sold in a foreign country, we may be subject to similar foreign laws and 40Table of Contentsregulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws, international dataprotection laws (including the EU Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement ofsuch data as well as EU member state implementing legislation), and implementation of corporate compliance programs and reporting of payments or transfers ofvalue to healthcare professionals.Healthcare ReformIn the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding thehealthcare system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability toprofitably sell any product candidates for which we obtain marketing approval. Among policy makers and payors in the United States and elsewhere, there issignificant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and expanding access. In theUnited States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives. In March2010, then President Obama signed into law the Affordable Care Act, which substantially changes the way healthcare will be financed by both governmental andprivate insurers, and significantly impacts the pharmaceutical industry. Among the provisions of the Affordable Care Act of importance to our business, including,without limitation, our ability to commercialize, and the prices we may obtain for, any of our product candidates that are approved for sale, are the following: • an annual, nondeductible fee on any entity that manufactures or imports branded prescription drugs and biologic agents, apportioned among theseentities according to their sales of branded prescription drugs under certain government healthcare programs, such as Medicare and Medicaid; • increases in the statutory minimum rebates a manufacturer must pay as a condition to having covered drugs available for payment under the MedicaidDrug Rebate program to 23.1% and 13% of the average manufacturer price for branded and generic drugs, respectively; • expansion of healthcare fraud and abuse laws, including the federal False Claims Act and the federal Anti-Kickback Statute, and the addition of newgovernment investigative powers and enhanced penalties for non-compliance; • extension of a manufacturer’s Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed careorganizations; • a new Medicare Part D coverage gap discount program, under which a participating manufacturer must agree to offer 50% point-of-sale discounts offnegotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatientdrugs to be covered under Medicare Part D; • expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals andby adding new eligibility categories for certain individuals with income at or below 133% of the federal poverty level; • expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program, known as the 340B drug pricingprogram; • the new requirements under the federal Open Payments program created as part of the Physician Payments Sunshine Act under Section 6002 of theAffordable Care Act and its implementing regulations, which requires manufacturers of drugs, devices, biologics and medical supplies for whichpayment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the U.S.Department of Health and Human Services information related to “payments or other transfers of value” made to physicians (defined to includedoctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals. Applicable manufacturers and applicable group purchasingorganizations must also report annually to the U.S. 41Table of Contents Department of Health and Human Services ownership and investment interests held by physicians (as defined above) and their immediate familymembers. Covered manufacturers are required to submit data reports by the 90th day of each calendar year; • a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and • a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, alongwith funding for such research.There have been judicial and Congressional challenges to certain aspects of the Affordable Care Act, and we expect such challenges and amendments tocontinue. In January, Congress voted to adopt a budget resolution for fiscal year 2017, or the Budget Resolution, that authorizes the implementation of legislationthat would repeal portions of the Affordable Care Act. The Budget Resolution is not a law; however, it is widely viewed as the first step toward the passage ofrepeal legislation. Further, on January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities underthe Affordable Care Act to waive, defer, grant exemptions from, or delay the implementation of any provision of the Affordable Care Act that would impose afiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. Congress alsocould consider subsequent legislation to replace elements of the Affordable Care Act that are repealed.In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. These changes include aggregatereductions to Medicare payments to providers of up to 2% per fiscal year, on average, through 2025, which went into effect in April 2013. In January 2013, thenPresident Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several types of providersand increased the statute of limitations period for the government to recover overpayments to providers from three to five years. Further, there has been increasinglegislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been several recent U.S.Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing andmanufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drugs. The full impacton our business of the Affordable Care Act and other new laws is uncertain but may result in additional reductions in Medicare and other healthcare funding. Nor isit clear whether other legislative changes will be adopted, if any, or how such changes would affect the demand for our products once commercialized.Regulations Outside of the United StatesIn addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales anddistribution of our product candidates to the extent we choose to sell any products outside of the United States. Whether or not we obtain FDA approval for aproduct, we must obtain approval of a product by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing ofthe product in those countries. The approval process varies from country to country and the time may be longer or shorter than that required for FDA approval. Forexample, based on scientific advice from the European Medicines Agency, or the EMA, we believe our current clinical development plan is likely to be insufficientto receive regulatory approval in Europe. During the next year, we plan to work with the EMA to formulate a development plan that may be more acceptable, butmay be unsuccessful in doing so or such plan may not be feasible. The requirements governing the conduct of clinical trials, product licensing, pricing andreimbursement vary greatly from country to country. As in the United States, post-approval regulatory requirements, such as those regarding product manufacture,marketing, or distribution would apply to any product that is approved outside the United States. 42Table of ContentsOther RegulationsWe are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmentalprotection, fire hazard control, and disposal of hazardous or potentially hazardous substances. We may incur significant costs to comply with such laws andregulations now or in the future.EmployeesAs of March 7, 2017, we had 32 full-time employees and one part-time employee. Of the full-time employees, 19 were primarily engaged in research anddevelopment activities and ten have an M.D. or Ph.D. degree. None of our employees are represented by labor unions or covered by collective bargainingagreements. We consider our relationship with our employees to be good.Research and DevelopmentWe have dedicated a significant portion of our resources to our efforts to develop our product candidates, entinostat and SNDX-6352. We incurred researchand development expenses of $31.7 million, $9.5 million and $10.2 million during the years ended December 31, 2016, 2015 and 2014, respectively. We anticipatethat a significant portion of our operating expenses will continue to be related to research and development in 2017, as we continue to advance our productcandidates through clinical development.Corporate and Other InformationWe were incorporated in Delaware in 2005. In 2011, we established a wholly owned subsidiary in the United Kingdom and in 2014 we established a whollyowned U.S. subsidiary. There have been no material activities for these entities to date. We currently operate in one segment.Our principal executive offices are located at 35 Gatehouse Drive, Building D, Floor 3, Waltham, Massachusetts 02451 and our telephone number is(781) 419-1400. Our corporate website address is www.syndax.com. Information contained on or accessible through our website is not a part of this Annual Report,and the inclusion of our website address in this Annual Report is an inactive textual reference only.We file electronically with the SEC, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments tothose reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. We make available on our website at www.syndax.com , under “Investors,”free of charge, copies of these reports as soon as reasonably practicable after filing or furnishing these reports with the SEC.Item 1A. Risk FactorsThis Annual Report on Form 10-K contains forward-looking information based on our current expectations. Because our business is subject to many risksand our actual results may differ materially from any forward-looking statements made by or on behalf of us, this section includes a discussion of important factorsthat could affect our business, operating results, financial condition and the trading price of our common stock. You should carefully consider these risk factors,together with all of the other information included in this Annual Report on Form 10-K as well as our other publicly available filings with the Securities andExchange Commission.Risks Related to Our Financial Position and Capital NeedsWe have incurred net losses since our inception and anticipate that we will continue to incur net losses for the foreseeable future.Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk thatany potential product candidate will fail to demonstrate 43Table of Contentsadequate efficacy or an acceptable safety profile, gain regulatory approval or be commercially viable. We are a clinical stage biopharmaceutical company withlimited operating history. We have no products approved for commercial sale and have not generated any product revenues to date, and we continue to incursignificant research and development and other expenses related to our ongoing operations and clinical development of entinostat. As a result, we are not and havenever been profitable and have incurred losses in each period since our inception in 2005.For the year ended December 31, 2016, we reported a net loss of $44.5 million; and as of December 31, 2016, we had an accumulated deficit of $305.3million, which included non-cash charges for stock-based compensation, preferred stock accretion and extinguishment charges. We expect to continue to incursignificant losses for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvalsfor, our product candidates. We may also encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affectour business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues, if any. Ourprior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.We currently have no source of product revenue and may never achieve or maintain profitability.Our ability to generate product revenue and become profitable depends upon our ability to successfully commercialize our two product candidates, entinostatand SNDX-6352. We do not anticipate generating revenue from the sale of our product candidates for the foreseeable future. Our ability to generate future productrevenue also depends on a number of additional factors, including, but not limited to, our ability to: • successfully complete the research and clinical development of, and receive regulatory approval for, our product candidates; • launch, commercialize and achieve market acceptance of our product candidates, and if launched independently, successfully establish a sales,marketing and distribution infrastructure; • continue to build a portfolio of product candidates through the acquisition or in-license of products, product candidates or technologies; • initiate preclinical and clinical trials for any additional product candidates that we may pursue in the future; • establish and maintain supplier and manufacturing relationships with third parties, and ensure adequate and legally compliant manufacturing of bulkdrug substances and drug products to maintain that supply; • obtain coverage and adequate product reimbursement from third-party payors, including government payors; • establish, maintain, expand and protect our intellectual property rights; and • attract, hire and retain additional qualified personnel.In addition, because of the numerous risks and uncertainties associated with drug development, we are unable to predict the timing or amount of increasedexpenses, and if or when we will achieve or maintain profitability. In addition, our expenses could increase beyond expectations if we decide to or are required bythe FDA or foreign regulatory authorities to perform studies or trials in addition to those that we currently anticipate. Even if we complete the development andregulatory processes described above, we anticipate incurring significant costs associated with launching and commercializing entinostat and any other productcandidates we may develop.Even if we generate revenues from the sale of our product candidates, we may not become profitable and may need to obtain additional funding to continueoperations or acquire additional products that will require 44Table of Contentsadditional funding to develop them. If we fail to become profitable or do not sustain profitability on a continuing basis, then we may be unable to continue ouroperations at planned levels and be forced to reduce our operations or even shut down.We will require additional capital to finance our planned operations, which may not be available to us on acceptable terms, or at all. As a result, we may notcomplete the development and commercialization of, or obtain regulatory approval for, entinostat or SNDX-6352 or develop new product candidates.Our operations have consumed substantial amounts of cash since our inception, primarily due to our research and development efforts. We expect ourresearch and development expenses to increase substantially in connection with our ongoing and planned activities. We believe that our existing cash, cashequivalents and short-term investments will fund our projected operating expenses and capital expenditure requirements for at least the next 12 months.Unexpected circumstances may cause us to consume capital more rapidly than we currently anticipate. For example, we may discover that we need to conductadditional activities which exceed our current budget to achieve appropriate rates of patient enrollment, which would increase our development costs.In any event, we will require additional capital to continue the development of, obtain regulatory approval for, and to commercialize entinostat and SNDX-6352 and any future product candidates. Any efforts to secure additional financing may divert our management from our day-to-day activities, which mayadversely affect our ability to develop and commercialize entinostat and SNDX-6352. In addition, we cannot guarantee that future financing will be available insufficient amounts or on terms acceptable to us, if at all. If we do not raise additional capital when required or on acceptable terms, we may need to: • delay, scale back or discontinue the development or commercialization of our product candidates or cease operations altogether; • seek strategic alliances for entinostat on terms less favorable than might otherwise be available; or • relinquish, or license on unfavorable terms, our rights to technologies or any future product candidates that we otherwise would seek to develop orcommercialize ourselves.If we need to conduct additional fundraising activities and we do not raise additional capital in sufficient amounts or on terms acceptable to us, we may beprevented from pursuing development and commercialization efforts, which will harm our business, operating results and prospects.Our future funding requirements, both short- and long-term, will depend on many factors, including: • the initiation, progress, timing, costs and results of clinical trials of our product candidates; • the outcome, timing and cost of seeking and obtaining regulatory approvals from the FDA and comparable foreign regulatory authorities, including thepotential for such authorities to require that we perform more trials than we currently expect; • the cost to establish, maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments wemay be required to make, or that we may receive, in connection with licensing, preparing, filing, prosecuting, defending and enforcing any patents orother intellectual property rights; • market acceptance of our product candidates; • the cost and timing of selecting, auditing and developing manufacturing capabilities, and potentially validating manufacturing sites for commercial-scale manufacturing; • the cost and timing for obtaining pricing and reimbursement, which may require additional trials to address pharmacoeconomic benefit; 45Table of Contents • the cost of establishing sales, marketing and distribution capabilities for our product candidates if either candidate receives regulatory approval and wedetermine to commercialize it ourselves; • the costs of acquiring, licensing or investing in additional businesses, products, product candidates and technologies; • the effect of competing technological and market developments; and • our need to implement additional internal systems and infrastructure, including financial and reporting systems, as we grow our company.If we cannot expand our operations or otherwise capitalize on our business opportunities because we cannot secure sufficient capital, our business, financialcondition and results of operations could be materially adversely affected.Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.We have incurred substantial losses during our history. We do not expect to become profitable in the near future, and we may never achieve profitability.Unused losses generally are available to be carried forward to offset future taxable income, if any, until such unused losses expire. Under Sections 382 and 383 ofthe Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) inits equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards, or NOLs, and other pre-change taxattributes (such as research tax credits) to offset its post-change taxable income or taxes may be limited. We completed an analysis through April 30, 2016 anddetermined that on March 30, 2007 and August 21, 2015 ownership changes had occurred. We may have experienced an ownership change subsequent to April 30,2016; and we may also experience ownership changes in the future as a result of shifts in our stock ownership, some of which may be outside of our control. As aresult, our ability to use our pre-change NOLs to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased futuretax liability to us. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate orpermanently increase state taxes owed.Risks Related to Our Business and IndustryEntinostat and SNDX-6352 are currently our only product candidates. If we are unable to successfully complete clinical development of, obtain regulatoryapproval for and commercialize entinostat or SNDX-6352, our business prospects will be significantly harmed.Entinostat and SNDX-6352 are currently our only product candidates. Our financial success will depend substantially on our ability to effectively andprofitably commercialize entinostat and SNDX-6352. In order to commercialize entinostat and SNDX-6352, we will be required to obtain regulatory approvals byestablishing that each of them is sufficiently safe and effective. The clinical and commercial success of entinostat and SNDX-6352 will depend on a number offactors, including the following: • timely commencement and completion of the planned Phase 1b/2 clinical trial of entinostat in combination with avelumab and the Phase 1 clinical trialof SNDX-6352; • completion of the planned Phase 1b/2 clinical trials of entinostat in combination with each of Keytruda and atezolizumab; • timely patient enrollment and completion of the Phase 3 clinical trial in advanced HR+, HER2- breast cancer, which may be significantly slower thanwe currently anticipate and will depend substantially upon the satisfactory performance of the ECOG-ACRIN and the NCI and other third-partycontractors for entinostat; • whether we are required by the FDA or foreign regulatory authorities to conduct additional clinical trials; 46Table of Contents • the prevalence and severity of adverse side effects; • the ability to demonstrate safety and efficacy of entinostat and SNDX-6352 for their proposed indications and the timely receipt of necessarymarketing approvals from the FDA and foreign regulatory authorities; • achieving and maintaining compliance with all applicable regulatory requirements; • the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing treatments; • the effectiveness of our own or our potential strategic collaborators’ marketing, sales and distribution strategy and operations in the United States andabroad; • the ability of our third-party contract manufacturers to produce trial supplies of entinostat and SNDX-6352, and to develop, validate and maintain acommercially viable manufacturing process that is compliant with cGMP; • the availability of commercial supplies of therapeutics, including Aromasin and Keytruda , and clinical supplies of investigational drugs, to support thedevelopment and marketing of the entinostat therapy as a component of a combination drug regimen for entinostat; • our ability to successfully commercialize our product candidates in the United States and abroad, whether alone or in collaboration with others; and • our ability to enforce our intellectual property rights in and to entinostat and SNDX-6352.If we fail to obtain regulatory approval for our product candidates, we will not be able to generate product sales, which will have a material adverse effect onour business and our prospects.Our strategy of combining entinostat with immune checkpoint inhibitors is clinically untested and we may fail to show that the combination is safe and welltolerated and demonstrates additional clinical benefit from the combination.Preclinical studies conducted by us and others suggest a strong rationale for combining entinostat with immune checkpoint inhibitors to enhance the immunesystem’s ability to detect and eliminate tumor cells. Our approach is to conduct Phase 1 and 2 clinical trials in patients with tumors that are known to be responsiveto immune checkpoint inhibitors and assess both the safety and efficacy of the combination of entinostat plus a checkpoint inhibitor. However, we have not yetdemonstrated the safety or the benefit of this combination in humans and we may be unable to establish a clinically meaningful benefit for patient without addedtoxicity.Although the NCI has entered into a SPA, agreement with the FDA relating to the pivotal Phase 3 clinical trial of entinostat for advanced HR+, HER2- breastcancer, this agreement does not guarantee any particular outcome with respect to regulatory review of the trial or any associated NDA for entinostat.The protocol for the pivotal Phase 3 trial of entinostat in combination with Aromasin in advanced HR+, HER2- breast cancer was reviewed and agreed uponby the FDA under an SPA agreement with the NCI. The SPA agreement allows for FDA evaluation of whether a clinical trial protocol could form the primary basisof an efficacy claim in support of a NDA. The SPA is an agreement that a Phase 3 clinical trial’s design, clinical endpoints, patient population and statisticalanalyses are sufficient to support the efficacy claim. Agreement on the SPA is not a guarantee of approval; and there is no assurance that the design of, or datacollected from, the trial will be adequate to obtain the requisite regulatory approval. Further, obtaining clinical trial data meeting the clinical endpoints insatisfaction of the SPA does not guarantee approval. The SPA is not binding on the FDA if public health concerns unrecognized at the time the SPA was enteredinto become evident or other new scientific concerns regarding product safety or efficacy arise. In addition, upon written agreement of both the FDA and the NCI,the SPA may be changed, and the FDA retains significant latitude and discretion in interpreting the terms of 47Table of Contentsthe SPA and any resulting trial data. As a result, we do not know how the FDA will interpret the parties’ respective commitments under the SPA, how it willinterpret the data and results from the pivotal Phase 3 clinical trial, whether the FDA will require that we conduct or complete one or more additional clinical trialsto support potential approval or whether entinostat will receive any regulatory approvals. ECOG-ACRIN, with sponsorship and funding support from the NCI, isconducting the pivotal Phase 3 clinical trial, which began enrollment in the second quarter of 2014.If the Phase 3 clinical trial of entinostat in combination with Aromasin in advanced HR+, HER2- breast cancer patients fails to demonstrate safety and efficacyto the satisfaction of regulatory authorities or does not otherwise produce positive results, we may incur additional costs or experience delays in completing, orultimately be unable to complete, the development and commercialization of entinostat.Before obtaining marketing approval from regulatory authorities for the sale of entinostat, we or our collaborators must conduct extensive trials todemonstrate the safety and efficacy of entinostat in humans. We have entered into an arrangement with ECOG-ACRIN to conduct the Phase 3 clinical trial ofentinostat in combination with Aromasin in advanced HR+, HER2- breast cancer patients. The trial will measure two primary endpoints of PFS, and overallsurvival. Based on information received from ECOG-ACRIN to date, PFS data is expected no sooner than the end of 2017 and overall survival data no sooner thanthe second half of 2019. If the Phase 3 clinical trial meets the PFS endpoint and the interim analysis of overall survival demonstrates a favorable trend, we expect tosubmit an NDA based on this data. However, if the trial does not meet the PFS endpoint, we will not be able to submit an NDA unless and until we receive datademonstrating that the primary endpoint for overall survival has been achieved. In addition, based on scientific advice from the European Medicines Agency, thecurrent Phase 3 clinical trial is not likely to be sufficient to receive regulatory approval in Europe for entinostat to treat advanced HR+, HER2- breast cancer, and itis unclear whether we would be able to complete an alternate clinical trial that would be sufficient.Despite the results reported in our Phase 2b clinical trial for entinostat in advanced estrogen receptor positive, or ER+, breast cancer, we do not knowwhether the Phase 3 clinical trial in advanced HR+, HER2- breast cancer will demonstrate adequate efficacy and safety to result in regulatory approval to marketentinostat in any particular cancer indications or jurisdiction. Additionally, while we do not expect that there will be overlapping toxicities between entinostat andAromasin , we cannot be certain that we will not observe these toxicities or unexpected side effects in the Phase 3 clinical trial.Clinical testing is expensive and difficult to design and implement, can take many years to complete and is inherently uncertain as to the outcome. A failureof one or more trials can occur at any stage of testing. The outcome of preclinical studies and early clinical trials may not accurately predict the success of latertrials, and interim results of a trial do not necessarily predict final results. For example, with the emergence of the new therapies such as Faslodex and Ibrance ,patients enrolled in the Phase 3 clinical trial may be different than those enrolled in our previous Phase 2b clinical trial in that they may have received Faslodex andIbrance prior to our trial and therefore may respond differently to treatment with entinostat. A number of companies in the pharmaceutical and biotechnologyindustries have suffered significant setbacks in advanced trials due to lack of efficacy or unacceptable safety profiles, notwithstanding promising results in earliertrials.The failure of ECOG-ACRIN to adequately perform its obligations and responsibilities in the conduct of the Phase 3 clinical trial or to meet expected deadlinescould substantially harm our business because we may not obtain regulatory approval for entinostat in a timely manner, or at all.We have entered into an arrangement with ECOG-ACRIN, pursuant to which it, with sponsorship and funding support by the NCI, is conducting the Phase 3clinical trial of entinostat in combination with Aromasin in advanced HR+, HER2- breast cancer patients. While we provide operational and logistical support forthe trial, we have limited control of their activities. We cannot control whether or not ECOG-ACRIN will devote sufficient time and resources to the trial, includingas a result of any reduction or delay in government funding or 48Table of Contentssponsorship of the activities of ECOG-ACRIN or the NCI. If ECOG-ACRIN does not successfully carry out its obligations and responsibilities or meet expecteddeadlines or if the quality or accuracy of the clinical data it obtains is compromised due to the failure to adhere to clinical protocols, regulatory requirements or forother reasons, the Phase 3 clinical trial may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfullycommercialize, entinostat. As a result, our results of operations and the commercial prospects for entinostat would be harmed, our costs could increase and ourability to generate revenues could be delayed.Although the Phase 3 clinical trial is being conducted by ECOG-ACRIN, we are responsible for ensuring that each of our trials is conducted in accordancewith the applicable protocol and legal, regulatory and scientific standards, and our reliance on ECOG-ACRIN does not relieve us of our regulatory responsibilities.We are required to comply with Good Clinical Practice, or GCP, which are regulations and guidelines enforced by the FDA, the Competent Authorities of theMember States of the European Economic Area and foreign regulatory authorities for any product in clinical development. Regulatory authorities enforce GCPthrough periodic inspections of trial sponsors, principal investigators and clinical trial sites. If we fail to comply with applicable GCP, the clinical data generated inour trials may be deemed unreliable and the FDA or foreign regulatory authorities may require us to perform additional trials before approving our marketingapplications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our trials comply withGCP requirements. In addition, we must conduct our trials with products produced under cGMP requirements. Failure to comply with any of these regulations mayrequire us to repeat preclinical and clinical trials, which would delay the regulatory development process.If there are delays in completing the Phase 3 clinical trial for entinostat in advanced HR+, HER2- breast cancer, we will be delayed in commercializingentinostat, our development costs may increase and our business may be harmed.The Phase 3 clinical trial of entinostat in combination with Aromasin in advanced HR+, HER2- breast cancer commenced in the second quarter of 2014, andECOG-ACRIN expects to have PFS data from this trial no sooner than the end of the second half of 2017. However, to date, ECOG-ACRIN’s enrollment ofpatients in this trial has been slower than expected. We do not know whether this trial will need to be restructured, or will be completed on schedule or at all. Ourproduct development costs will increase if we experience delays in clinical testing. Significant trial delays also could shorten any periods during which we mayhave the exclusive right to commercialize entinostat or allow our competitors to bring products to market before we do, which would impair our ability tosuccessfully capitalize on entinostat and may harm our business, results of operations and prospects. Events which may result in a delay or unsuccessful completionof clinical development of entinostat include, among other things: • failure of ECOG-ACRIN to timely identify and enroll patients in the Phase 3 clinical trial; • feedback from the FDA and foreign regulatory authorities, institutional review boards, or IRBs, or the data safety monitoring board, or results fromclinical trials that might require modification to a clinical trial protocol; • imposition of a clinical hold by the FDA or other regulatory authorities, a decision by the FDA, other regulatory authorities, IRBs or the company, or arecommendation by a data safety monitoring board to suspend or terminate trials at any time for safety issues or for any other reason; • deviations from the trial protocol by clinical trial sites and investigators or failure to conduct the trial in accordance with regulatory requirements; • failure of third parties, such as ECOG-ACRIN or contract research organizations, or CROs, to satisfy their contractual duties or meet expecteddeadlines; • withdrawal of sponsorship of the NCI because of a failure of ECOG-ACRIN to meet certain performance metrics in the clinical trial; 49Table of Contents • delays in the testing, validation, manufacturing and delivery of entinostat to the clinical trial sites; • unexpectedly high rate of patients withdrawing consent or being lost to follow-up; • delays caused by patients dropping out of a trial due to side effects or disease progression; • unacceptable risk-benefit profile or unforeseen safety issues or adverse side effects; • failure to demonstrate the efficacy of entinostat in this clinical trial; • inability to identify and maintain a sufficient number of clinical trial sites, many of which may already be engaged in other clinical trial programs,including some that may be for the same indication; • withdrawal of clinical trial sites from our clinical trials as a result of changing standards of care or the ineligibility of a site to participate in our trials;or • changes in government regulations or administrative actions or lack of adequate funding to continue the trials.An inability by us to timely complete clinical development could result in additional costs to us or impair our ability to generate product revenues ordevelopment, regulatory, commercialization and sales milestone payments and royalties on product sales.If we are or our collaborators are unable to enroll patients in clinical trials, these clinical trials may not be completed on a timely basis or at all.The timely completion of clinical trials largely depends on patient enrollment. Many factors affect patient enrollment, including: • perception about the relative efficacy of our product candidates versus other compounds in clinical development or commercially available; • evolving standard of care in treating cancer patients with immuno-oncology agents; • the size and nature of the patient population; • the number and location of clinical trial sites enrolled; • competition with other organizations or our own clinical trials for clinical trial sites or patients; • the eligibility and exclusion criteria for the trial; • the design of the trial; • ability to obtain and maintain patient consents; and • risk that enrolled subjects will drop out before completion.As a result of the above factors, there is a risk that our or our collaborators’ clinical trials may not be completed on a timely basis or at all.We are dependent on Merck, Genentech, Merck KGaA and Pfizer and any future collaborators to perform satisfactorily under our agreements.Under the agreements with Merck, Genentech, Merck KGaA and Pfizer and any future collaborations, we will be dependent on our collaborators’performance of their responsibilities and their cooperation with us. Our collaborators may not perform their obligations under our agreements with them orotherwise cooperate with us. We cannot control whether our collaborators will devote the necessary resources to the activities contemplated by our collaborativeagreements, nor can we control the timing of their performance. Our collaborators may choose to pursue existing or alternative technologies in preference to thosebeing developed in collaboration with 50Table of Contentsus. Disputes may arise between us and our collaborators that delay the development and commercialization of our product candidates, disputes that may be difficultand costly to resolve, or may not be resolved. In addition, a collaborator for the potential product may have the right to terminate the collaboration at its discretionand, for example, Merck has the right to terminate the Merck agreement for any reason after a specified advance notice period. Any termination may require us toseek a new collaborator, which we may not be able to do on a timely basis, if at all, or may require us to delay or scale back the commercialization efforts or spendadditional money to complete the clinical trial. The occurrence of any of these events could adversely affect the commercialization of entinostat and materiallyharm our business.If we are unable to enter into additional clinical collaborations with developers of immune checkpoint inhibitors or other combination therapies to explorethe same or additional indications, the commercial potential of entinostat could be limited. Such collaborations are complex, and any potential discussions may notresult in a definitive agreement for many reasons. For example, whether we reach a definitive agreement for a clinical collaboration will depend, among otherthings, upon our respective assessments of the other party’s resources and expertise, the terms and conditions of the proposed collaboration, and the proposedcollaborator’s evaluation of a number of factors. Those factors may include the design or results of our clinical trials, the potential market for the combinationtherapy, the costs and complexities of manufacturing and delivering the potential product to patients, the potential of competing products, and industry and marketconditions generally.The actions of KHK and any other current or future sublicensees could adversely affect our business.We currently sublicense entinostat to third parties for development and commercialization in certain foreign jurisdictions. Specifically, we have a sublicenseagreement with KHK under which we granted KHK an exclusive sublicense to develop and commercialize entinostat in Japan and Korea. It is possible that anyclinical trials conducted by KHK and other current or future sublicensees in their respective jurisdictions could have negative results, which in turn could have amaterial adverse effect on the development of entinostat for development and commercialization in the United States and the rest of the world.We are dependent on UCB to comply with the terms of our license agreement for SNDX-6352.Our commercial success also depends upon our ability to develop, manufacture, market and sell SNDX-6352. In July 2016, we entered into the UCB licenseagreement pursuant to which we obtained a worldwide, sublicenseable, exclusive license to SNDX-6352, an IND-ready anti-CSF-1R monoclonal antibody. Underthe UCB license agreement, we are dependent on UCB’s performance of its responsibilities and its cooperation with us. UCB may not perform its obligations underthe UCB license agreement or otherwise cooperate with us. We cannot control whether UCB will devote the necessary resources to its obligations under the UCBlicense agreement, nor can we control the timing of its performance. For example, under the UCB license agreement, UCB is transferring to us certain data andmaterials, provide limited technical assistance and certain transitional services, and manufacture and supply us with a preliminary supply of SNDX-6352, which weexpect will assist us with the development, manufacture and commercialization of SNDX-6352. If UCB fails to complete such technology transfer or to supply uswith sufficient quantities of SNDX-6352, our efforts to develop and commercialization SNDX-6352 may be delayed or may fail. Additionally, certain of the rightslicensed to us under the UCB license agreement are in-licensed by UCB from third parties. We are dependent on UCB maintaining the applicable third-partylicense agreements in full force and effect, which may include activities and performance obligations that are not within our control. If any of these third-partylicense agreements is terminated, certain of our rights to develop, manufacture, commercialize or sell SNDX-6352 may be terminated as well. The occurrence ofany of these events could adversely affect the development and commercialization of SNDX-6352, and materially harm our business. 51Table of ContentsWe may be required to relinquish important rights to and control over the development and commercialization of our product candidates to our current orfuture collaborators.Our collaborations, including any future strategic collaborations we enter into, could subject us to a number of risks, including: • we may be required to undertake the expenditure of substantial operational, financial and management resources; • we may be required to issue equity securities that would dilute our existing stockholders’ percentage of ownership; • we may be required to assume substantial actual or contingent liabilities; • we may not be able to control the amount and timing of resources that our strategic collaborators devote to the development or commercialization ofour product candidates; • strategic collaborators may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a product candidate, repeat orconduct new clinical trials or require a new version of a product candidate for clinical testing; • strategic collaborators may not pursue further development and commercialization of products resulting from the strategic collaboration arrangementor may elect to discontinue research and development programs; • strategic collaborators may not commit adequate resources to the marketing and distribution of our product candidates, limiting our potential revenuesfrom these products; • disputes may arise between us and our strategic collaborators that result in the delay or termination of the research, development or commercializationof our product candidates or that result in costly litigation or arbitration that diverts management’s attention and consumes resources; • strategic collaborators may experience financial difficulties; • strategic collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in a manner thatcould jeopardize or invalidate our proprietary information or expose us to potential litigation; • business combinations or significant changes in a strategic collaborator’s business strategy may also adversely affect a strategic collaborator’swillingness or ability to complete its obligations under any arrangement; • strategic collaborators could decide to move forward with a competing product candidate developed either independently or in collaboration withothers, including our competitors; and • strategic collaborators could terminate the arrangement or allow it to expire, which would delay the development and may increase the cost ofdeveloping, our product candidates.We may explore strategic collaborations that may never materialize or may fail.We may periodically explore a variety of possible strategic collaborations in an effort to gain access to additional product candidates or resources. At thecurrent time, we cannot predict what form such a strategic collaboration might take. We are likely to face significant competition in seeking appropriate strategiccollaborators, and strategic collaborations can be complicated and time consuming to negotiate and document. We may not be able to negotiate strategiccollaborations on acceptable terms, or at all. We are unable to predict when, if ever, we will enter into any additional strategic collaborations because of thenumerous risks and uncertainties associated with establishing them. 52Table of ContentsThe regulatory approval processes of the FDA and foreign regulatory authorities are lengthy, time-consuming and inherently unpredictable. Our inability toobtain regulatory approval for our product candidates could harm our business.The time required to obtain approval by the FDA and foreign regulatory authorities is unpredictable, but typically takes many years following thecommencement of preclinical studies and clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. Inaddition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’sclinical development and may vary among jurisdictions. We have not obtained regulatory approval for any of our product candidates, and it is possible that we willnever obtain regulatory approval for our existing product candidates or any future product candidates.Our product candidates could fail to receive regulatory approval from the FDA or foreign regulatory authorities for many reasons, including but not limitedto: • failure to demonstrate that our product candidates are safe and effective; • failure of clinical trials to meet the primary endpoints or level of statistical significance required for approval; • failure to demonstrate that the clinical and other benefits of a product candidate outweigh any of its safety risks; • disagreement with our interpretation of data from preclinical studies or clinical trials; • disagreement with the design or implementation of our or our collaborators’ trials; • the insufficiency of data collected from trials of our product candidates to support the submission and filing of a NDA or other submission or to obtainregulatory approval; • failure to obtain approval of the manufacturing and testing processes or facilities of third-party manufacturers with whom we contract for clinical andcommercial supplies; • receipt of a negative opinion from an advisory committee due to a change in the standard of care regardless of the outcome of the clinical trials; or • changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval.The FDA or foreign regulatory authorities may require more information, including additional preclinical or clinical data, to support approval, which maydelay or prevent approval and our commercialization plans, or may cause us to decide to abandon our development program. Even if we were to obtain approval,regulatory authorities may approve entinostat and/or SNDX-6352 for a more limited patient population than we request, may grant approval contingent on theperformance of costly post-marketing trials, may impose a REMS or foreign regulatory authorities may require the establishment or modification of a similarstrategy that may, for instance, restrict distribution of entinostat and impose burdensome implementation requirements on us, or may approve it with a label thatdoes not include the labeling claims necessary or desirable for the successful commercialization of entinostat, all of which could limit our ability to successfullycommercialize our product candidates.We are not developing entinostat as a monotherapy. A shortage in the supply of Aromasin, Keytruda, atezolizumab, avelumab or other drugs used incombination with entinostat or cessation of development efforts for investigational agents being studied with entinostat could increase our development costsand adversely affect our ability to commercialize entinostat, and any unexpected adverse events with any of the drugs used in combination with entinostat couldhalt or delay development of entinostat.Cancer drugs have from time to time been in short supply and, because many or all of these cancer drugs are also widely used in cancer treatment currently,we will compete with a broad range of healthcare providers and 53Table of Contentsother companies for availability of those drugs. Any shortage of Aromasin, Keytruda , atezolizumab, avelumab or other drugs that we are testing in combinationwith entinostat could adversely affect our ability to timely conduct the Phase 3 clinical trial in advanced HR+, HER2- breast cancer and the Phase 1b/2 clinicaltrials in NSCLC, melanoma, ovarian cancer and TNBC, and if entinostat receives regulatory approval, to commercialize entinostat for treatment of advanced HR+,HER2- breast cancer, NSCLC, melanoma, ovarian cancer or TNBC. A shortage of supply may also result in an increase, which could be significant, in our costs ofprocuring Aromasin .Additionally, because entinostat is being developed for use in combination with other cancer treatments, the development of entinostat may be delayed orhalted if unexpected adverse events occurring in patients are attributed to entinostat. Likewise, new adverse events emerging from commercialized or developmentstage drugs being administered with entinostat may limit or halt the potential of such combinations.Our product candidates may not achieve adequate market acceptance among physicians, patients, healthcare payors and others in the medical community to becommercially successful.Even if our product candidates receive regulatory approval, they may not gain sufficient market acceptance among physicians, patients, healthcare payorsand others in the medical community. Our commercial success also depends on coverage and adequate reimbursement by third-party payors, including governmentpayors, which may be difficult or time-consuming to obtain, may be limited in scope and may not be obtained in all jurisdictions in which we may seek to marketour product candidates. The degree of market acceptance will depend on a number of factors, including: • the efficacy and safety profile as demonstrated in trials; • the timing of market introduction as well as competitive products; • the clinical indications for which the product candidate is approved; • acceptance of the product candidate as a safe and effective treatment by physicians, clinics and patients; • the potential and perceived advantages of our product candidates over alternative treatments; • the cost of treatment in relation to alternative treatments; • the availability of coverage and adequate reimbursement and pricing by third parties and government authorities; • relative convenience and ease of administration; • the frequency and severity of adverse events; • the effectiveness of sales and marketing efforts; and • unfavorable publicity relating to our product candidates.If our product candidates are approved but do not achieve an adequate level of acceptance by physicians, hospitals, healthcare payors and patients, we maynot generate sufficient revenue to become or remain profitable.We rely on third-party suppliers to manufacture and distribute our clinical drug supplies for our product candidates, we intend to rely on third parties forcommercial manufacturing and distribution of our product candidates and we expect to rely on third parties for manufacturing and distribution of preclinical,clinical and commercial supplies of any future product candidates.We do not currently have, nor do we plan to acquire, the infrastructure or capability to manufacture or distribute preclinical, clinical or commercial quantitiesof drug substance or drug product, including entinostat and SNDX-6352. While we expect to continue to depend on third-party manufacturers for the foreseeablefuture, 54Table of Contentswe do not have direct control over the ability of these manufacturers to maintain adequate manufacturing capacity and capabilities to serve our needs, includingquality control, quality assurance and qualified personnel. We are dependent on our third-party manufacturers for compliance with cGMPs and for manufacture ofboth active drug substances and finished drug products. Facilities used by our third-party manufacturers to manufacture drug substance and drug product forcommercial sale must be approved by the FDA or other relevant foreign regulatory agencies pursuant to inspections that will be conducted after we submit ourNDA or relevant foreign regulatory submission to the applicable regulatory agency. If our third-party manufacturers cannot successfully manufacture materials thatconform to our specifications and/or the strict regulatory requirements of the FDA or foreign regulatory agencies, they will not be able to secure and/or maintainregulatory approval for their manufacturing facilities. Furthermore, these third-party manufacturers are engaged with other companies to supply and/or manufacturematerials or products for such companies, which also exposes our third-party manufacturers to regulatory risks for the production of such materials and products.As a result, failure to meet the regulatory requirements for the production of those materials and products may also affect the regulatory clearance of a third-partymanufacturers’ facility. If the FDA or a foreign regulatory agency does not approve these facilities for the manufacture of our product candidates, or if it withdrawsits approval in the future, we may need to find alternative manufacturing facilities, which would impede or delay our ability to develop, obtain regulatory approvalfor or market our product candidates, if approved.A breakthrough therapy designation by the FDA for entinostat may not lead to a faster development or regulatory review or approval process, and it does notincrease the likelihood that entinostat will receive marketing approval.We have received breakthrough therapy designation from the FDA for entinostat when used in combination with Aromasin based on the overall survivalresults from our completed Phase 2b clinical trial in advanced HR+, HER2- breast cancer. A breakthrough therapy is defined as a drug that is intended, alone or incombination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug maydemonstrate substantial improvement over existing therapies on one or more clinically significant endpoints. The Phase 2b trial showed statistically significantimprovements in PFS, the primary endpoint, and OS, an exploratory endpoint. Receipt of a breakthrough therapy designation for a drug candidate may not result ina faster development process or review compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate approval bythe FDA. In addition, the FDA may later decide that entinostat no longer meets the conditions for qualification or decide that the time period for FDA review willnot be shortened. For instance, if results from the Phase 3 clinical trial do not confirm the improvements in PFS or overall survival observed in our Phase 2bclinical trial, the FDA may rescind our breakthrough therapy designation.Even if our product candidates receive regulatory approval, they may still face future development and regulatory difficulties.Even if we obtain regulatory approval for our product candidates, they would be subject to ongoing requirements by the FDA and foreign regulatoryauthorities governing the manufacture, quality control, further development, labeling, packaging, storage, distribution, safety surveillance, import, export,advertising, promotion, recordkeeping and reporting of safety and other post-market information. The FDA and foreign regulatory authorities will continue toclosely monitor the safety profile of any product even after approval. If the FDA or foreign regulatory authorities become aware of new safety information afterapproval of a product candidate, they may require labeling changes or establishment of a REMS or similar strategy, impose significant restrictions on its indicateduses or marketing, or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance.In addition, manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatoryauthorities for compliance with cGMP regulations and standards. If we or a regulatory agency discover previously unknown problems with a product, such asadverse events of 55Table of Contentsunanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product,the manufacturing facility or us, including withdrawal of the product from the market or suspension of manufacturing, or we may recall the product fromdistribution. If we, or our third-party manufacturers, fail to comply with applicable regulatory requirements, a regulatory agency may: • issue warning letters or untitled letters; • mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners; • require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates forspecific actions and penalties for noncompliance; • seek an injunction or impose civil or criminal penalties or monetary fines; • suspend or withdraw regulatory approval; • suspend any ongoing clinical trials; • refuse to approve pending applications or supplements to applications filed by us; • suspend or impose restrictions on operations, including costly new manufacturing requirements; or • seize or detain products, or refuse to permit the import or export of products.The occurrence of any event or penalty described above may inhibit our ability to commercialize and generate revenue from the sale of our productcandidates.Advertising and promotion of any product candidate that obtains approval in the United States will be heavily scrutinized by the FDA, the Department ofJustice, the Department of Health and Human Services’ Office of Inspector General, state attorneys general, members of Congress, other government agencies andthe public. Violations, including promotion of our products for unapproved (or off-label) uses, may be subject to enforcement letters, inquiries and investigations,and civil and criminal sanctions by the government. Additionally, foreign regulatory authorities will heavily scrutinize advertising and promotion of any productcandidate that obtains approval in their respective jurisdictions.In the United States, engaging in the impermissible promotion of our products for off-label uses can also subject us to false claims litigation under federaland state statutes, which can lead to administrative, civil and criminal penalties, damages, monetary fines, disgorgement, individual imprisonment, exclusion fromparticipation in Medicare, Medicaid and other federal healthcare programs, curtailment or restructuring of our operations and agreements that materially restrict themanner in which a company promotes or distributes drug products. These false claims statutes include, but are not limited to, the federal civil False Claims Act,which allows any individual to bring a lawsuit against an individual or entity, including a pharmaceutical or biopharmaceutical company on behalf of the federalgovernment alleging the knowing submission of false or fraudulent claims, or causing to present such false or fraudulent claims, for payment or approval by afederal program such as Medicare or Medicaid. These False Claims Act lawsuits against pharmaceutical and biopharmaceutical companies have increasedsignificantly in number and breadth, leading to several substantial civil and criminal settlements regarding certain sales practices, including promoting off-labeldrug uses involving fines in excess of $1.0 billion. This growth in litigation has increased the risk that a pharmaceutical company will have to defend a false claimaction, pay settlement fines or restitution, agree to comply with burdensome reporting and compliance obligations, and be excluded from participation in Medicare,Medicaid and other federal and state healthcare programs. If we do not lawfully promote our approved products, we may become subject to such litigation, whichhave a material adverse effect on our business, financial condition and results of operations. 56Table of ContentsOur product candidates may cause undesirable side effects or have other properties that could delay or prevent its regulatory approval, limit the commercialscope of its approved use, or result in significant negative consequences following any marketing approval.Undesirable side effects caused by our product candidates could cause the interruption, delay or halting of the trials and could result in a more restrictivelabel or the delay or denial of regulatory approval by the FDA or other foreign regulatory authorities. In our Phase 2b clinical trial of entinostat in advanced HR+,HER2- breast cancer, the most significant adverse events were fatigue, gastrointestinal disturbances and hematologic toxicities, all of which occurred in highernumbers than in the placebo group. Results of the clinical trials may reveal a high and unacceptable severity and prevalence of side effects or other unexpectedcharacteristics. In such event, the trials could be suspended or terminated, or the FDA or foreign regulatory authorities could deny approval of our productcandidates for any or all targeted indications. Drug-related side effects could affect patient recruitment or the ability of enrolled subjects to complete the trial orresult in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects.Additionally, if our product candidates receive marketing approval, and we or others later identify undesirable side effects, a number of potentiallysignificant negative consequences could result, including: • we may suspend marketing of, or withdraw or recall, the product; • regulatory authorities may withdraw approvals; • regulatory authorities may require additional warnings on the product labels; • the FDA or other regulatory authorities may issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containingwarnings about the product; • the FDA may require the establishment or modification of a REMS or foreign regulatory authorities may require the establishment or modification of asimilar strategy that may, for instance, restrict distribution of the product and impose burdensome implementation requirements on us; • regulatory authorities may require that we conduct post-marketing studies; • we could be sued and held liable for harm caused to subjects or patients; and • our reputation may suffer.Any of these events could prevent us from achieving or maintaining market acceptance of our product candidates for use in targeted indications or otherwisematerially harm its commercial prospects, if approved, and could harm our business, results of operations and prospects.Our failure to obtain regulatory approval in international jurisdictions would prevent us from marketing our product candidates outside the United States.In order to market and sell our product candidates in other jurisdictions, we must obtain separate marketing approvals for those jurisdictions and comply withtheir numerous and varying regulatory requirements. We may not obtain foreign regulatory approvals on a timely basis, or at all. The approval procedure variesamong countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. Theregulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countriesoutside the United States, product reimbursement approvals must be secured before regulatory authorities will approve the product for sale in that country.Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us andcould delay or prevent the introduction of our product candidates in certain countries. Further, clinical trials conducted in one country may not be accepted byregulatory authorities in other countries and regulatory approval in one country does not ensure approval in any other country, while a failure or delay in obtainingregulatory approval in one country may have a negative effect on the regulatory approval process in others. For example, based on scientific advice 57Table of Contentsfrom the European Medicines Agency, the current Phase 3 clinical trial is likely to be insufficient to receive regulatory approval in Europe for entinostat to treatadvanced HR+, HER2- breast cancer. Our failure to obtain approval of our product candidates by foreign regulatory authorities may negatively impact thecommercial prospects of such product candidates and our business prospects could decline. Also, if regulatory approval for our product candidates is granted, itmay be later withdrawn. If we fail to comply with the regulatory requirements in international jurisdictions and receive applicable marketing approvals, our targetmarket will be reduced and our ability to realize the full market potential for our product candidates will be harmed and our business may be adversely affected.We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.The pharmacologic treatment of NSCLC, melanoma, ovarian cancer and TNBC patients includes chemotherapies and therapies targeting specific genemutations. More recently, immune checkpoint inhibitors have been approved for NSCLC and melanoma and are under investigation for ovarian cancer and TNBC.There are currently no approved combination immuno-oncology therapies although numerous drugs are undergoing active clinical investigation. We believe that ifentinostat in combination with either Keytruda , atezolizumab or avelumab were approved for the treatment of NSCLC, melanoma, TNBC or ovarian cancer, itwould face competition from these standard-of-care approaches and other investigational drugs being tested in combination with any of these approaches.If entinostat in combination with Aromasin were approved for treatment of advanced HR+, HER2- breast cancer, it could face competition from othertherapies recently approved for use in combination with hormone therapy in this population, including Ibrance , Afinitor , and other therapies currently in Phase 3clinical development such as abemaciclib, being developed by Eli Lilly and Company, and ribociclib and buparlisib, both of which are being developed byNovartis.Many of our existing or potential competitors have substantially greater financial, technical and human resources than we do and significantly greaterexperience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of products and the commercialization of thoseproducts. Our competitors may be more successful than us in obtaining FDA approval for drugs and achieving widespread market acceptance. Our competitors’drugs may be more effective or more effectively marketed and sold than any drug we may commercialize and may render our product candidates obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our product candidates. Our competitors may also obtain FDA or otherregulatory approval for their products more rapidly than we may obtain approval for ours. We anticipate that we will face intense and increasing competition asnew drugs enter the market and advanced technologies become available.We believe that our ability to successfully compete will depend on, among other things: • the efficacy and safety profile of our product candidates relative to marketed products and product candidates in development by third parties; • the time it takes for our product candidates to complete clinical development and receive marketing approval; • our ability to commercialize our product candidates if they receive regulatory approval; • the price of our product candidates, including in comparison to branded or generic competitors; • whether coverage and adequate levels of reimbursement are available under private and governmental health insurance plans, including Medicare; • our ability to manufacture commercial quantities of our product candidates if they receive regulatory approval; and • acceptance of entinostat in combination with Aromasin, Keytruda and other drugs by physicians and other healthcare providers. 58Table of ContentsEven if we obtain regulatory approval of our product candidates, the availability and price of our competitors’ products could limit the demand and the pricewe are able to charge. We may not be able to implement our business plan if the acceptance of our product candidates is inhibited by price competition or thereluctance of physicians to switch from existing methods of treatment, or if physicians switch to other new drug or biologic products or choose to reserve our drugsfor use in limited circumstances.Adverse events in the field of immuno-oncology could damage public perception of our product candidates and negatively affect our business.The commercial success of our product candidates will depend in part on public acceptance of the use of cancer immunotherapies. Adverse events in clinicaltrials of our product candidates or in clinical trials of others developing similar products and the resulting publicity, as well as any other adverse events in the fieldof immuno-oncology that may occur in the future, could result in a decrease in demand for any products that we may develop. If public perception is influenced byclaims that the use of cancer immunotherapies is unsafe, our product candidates may not be accepted by the general public or the medical community.Future adverse events in immuno-oncology or the biopharmaceutical industry could also result in greater governmental regulation, stricter labelingrequirements and potential regulatory delays in the testing or approvals of our products. Any increased scrutiny could delay or increase the costs of obtainingregulatory approval for our product candidates.We must attract and retain additional highly skilled employees in order to succeed.To succeed, we must recruit, retain, manage and motivate qualified clinical, scientific, technical and management personnel and we face significantcompetition for experienced personnel. If we do not succeed in attracting and retaining qualified personnel, particularly at the management level, it could adverselyaffect our ability to execute our business plan and harm our operating results. In particular, the loss of one or more of our executive officers could be detrimental tous if we cannot recruit suitable replacements in a timely manner. The competition for qualified personnel in the pharmaceutical industry is intense and as a result,we may be unable to continue to attract and retain qualified personnel necessary for the development of our business or to recruit suitable replacement personnel.Many of the other pharmaceutical companies that we compete against for qualified personnel have greater financial and other resources, different riskprofiles and a longer history in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. Some ofthese characteristics may be more appealing to high-quality candidates than what we have to offer. If we are unable to continue to attract and retain high-qualitypersonnel, the rate and success at which we can discover and develop product candidates and our business will be limited.Even if we commercialize our product candidates, they or any other product candidates that we develop, may become subject to unfavorable pricing regulationsor third-party coverage or reimbursement practices, which could harm our business.Our ability to successfully commercialize entinostat, or any other product candidates that we develop, will depend in part on the extent to which coverageand adequate reimbursement for these products and related treatments will be available from government healthcare programs, private health insurers, managedcare plans and other organizations. Government authorities and other third-party payors, such as private health insurers and health maintenance organizations,determine which medications they will cover and establish reimbursement levels. Government authorities and other third-party payors have attempted to controlcosts by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that drug companies providethem with predetermined discounts from list prices and are challenging the prices charged for medical products. We cannot be sure that coverage andreimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be. 59Table of ContentsLimitation on coverage and reimbursement may impact the demand for, or the price of, and our ability to successfully commercialize entinostat or any otherproduct candidates that we develop.There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the indicationsfor which the drug is approved by the FDA or foreign regulatory authorities. Moreover, eligibility for coverage and reimbursement does not imply that a drug willbe paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution expenses. Interim reimbursement levelsfor new drugs, if applicable, may also not be sufficient to cover our costs and may only be temporary. Reimbursement rates may vary according to the use of thedrug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated into existingpayments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payorsand by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States.Private payors often follow the CMS’ decisions regarding coverage and reimbursement to a substantial degree. However, one payor’s determination toprovide coverage for a drug product does not assure that other payors will also provide coverage for the drug product. As a result, the coverage determinationprocess is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payorseparately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. Our inability to promptlyobtain coverage and adequate reimbursement rates from both government-funded and private payors for any approved products that we develop could have anadverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.The regulations that govern marketing approvals, coverage and reimbursement for new drug products vary widely from country to country. Current andfuture legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Somecountries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or productlicensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initialapproval is granted. As a result, we may obtain marketing approval for our product candidates in a particular country, but be subject to price regulations that delayour commercial launch of the product, possibly for lengthy time periods, which could negatively impact the revenues we generate from the sale of the product inthat particular country. Adverse pricing limitations may hinder our ability to recoup our investment even if our product candidates obtain marketing approval.There can be no assurance that our product candidates, if they are approved for sale in the United States or in other countries, will be considered medicallyreasonable and necessary for a specific indication, that it will be considered cost effective by third-party payors, that coverage and an adequate level ofreimbursement will be available, or that third-party payors’ reimbursement policies will not adversely affect our ability to sell our product candidates profitably.We do not currently have any sales, marketing or distribution experience or infrastructure.In order to market any approved product candidate in the future, we must build our sales, marketing, managerial and other non-technical capabilities or makearrangements with third parties to perform these services, as we do not presently have such capabilities. To develop our internal sales, distribution and marketingcapabilities, we would have to invest significant amounts of financial and management resources in the future. For drugs where we decide to perform sales,marketing and distribution functions ourselves, we could face a number of challenges, including that: • we may not be able to attract and build a significant marketing or sales force; • the cost of establishing, training and providing regulatory oversight for a marketing or sales force may not be justifiable in light of the revenuesgenerated by any particular product; 60Table of Contents • our direct or indirect sales and marketing efforts may not be successful; and • there are significant legal and regulatory risks in drug marketing and sales that we have never faced, and any failure to comply with all legal andregulatory requirements for sales, marketing and distribution could result in enforcement action by the FDA or other authorities that could jeopardizeour ability to market the product or could subject us to substantial liability.Alternatively, we may rely on third parties to launch and market our product candidates, if approved. We may have limited or no control over the sales,marketing and distribution activities of these third parties and our future revenue may depend on the success of these third parties. Additionally, if these thirdparties fail to comply with all applicable regulatory requirements, the FDA could take enforcement action that could jeopardize our ability to market the productcandidate.Current and future legislation may increase the difficulty and cost for us to commercialize our product candidates and affect the prices we may obtain.The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that couldprevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any productcandidate for which we obtain marketing approval. For example, then President Obama signed into law the Affordable Care Act. Among other cost containmentmeasures, the Affordable Care Act established an annual, nondeductible fee on any entity that manufactures or imports branded prescription drugs and biologicagents, a Medicare Part D coverage gap discount program, and a formula that increased the rebates a manufacturer must pay under the Medicaid Drug RebateProgram. There have been judicial and Congressional challenges to certain aspects of the Affordable Care Act, and we expect there will be additional challengesand amendments in the future. In January, Congress voted to adopt a budget resolution for fiscal year 2017, or the Budget Resolution, that authorizes theimplementation of legislation that would repeal portions of the Affordable Care Act. The Budget Resolution is not a law; however, it is widely viewed as the firststep toward the passage of repeal legislation. Further, on January 20, 2017, President Trump signed an Executive Order directing federal agencies with authoritiesand responsibilities under the Affordable Care Act to waive, defer, grant exemptions from, or delay the implementation of any provision of the Affordable Care Actthat would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medicaldevices. Congress also could consider subsequent legislation to replace elements of the Affordable Care Act that are repealed. We cannot predict how theAffordable Care Act, its possible repeal, or any legislation that may be proposed to replace the Affordable Care Act will impact our business.Other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. For example, in August 2011, then President Obamasigned into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congressproposals in spending reductions. The Joint Select Committee on Deficit Reduction did not agree upon a targeted deficit reduction of at least $1.2 trillion for fiscalyears 2012 through 2021, triggering the Affordable Care Act’s automatic reduction to several government programs. This included aggregate reductions toMedicare payments to providers of up to 2% per fiscal year, effective as of 2013. Further legislation has extended the 2% reduction to 2025. In January 2013, thenPresident Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several types of providersand increased the statute of limitations period for the government to recover overpayments to providers from three to five years. Further, there has been increasinglegislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been several recent U.S.Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing andmanufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drugs. 61Table of ContentsWe expect that the Affordable Care Act, as well as other current or future healthcare reform measures may result in more rigorous coverage criteria and inadditional downward pressure on the price that we receive for any approved product. This could seriously harm our future revenues. Any reduction inreimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of costcontainment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products.Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of our product candidates.We face an inherent risk of product liability exposure related to the testing of our product candidates in human trials and will face an even greater risk if wecommercially sell any products that we may develop. Product liability claims may be brought against us by subjects enrolled in our trials, patients, healthcareproviders or others using, administering or selling our products. If we cannot successfully defend ourselves against claims that our product candidates or otherproducts that we may develop caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in: • decreased demand for our product candidates; • termination of clinical trial sites or entire trial programs; • injury to our reputation and significant negative media attention; • withdrawal of trial participants; • significant costs to defend the related litigation; • substantial monetary awards to trial subjects or patients; • diversion of management and scientific resources from our business operations; and • the inability to commercialize any products that we may develop.While we currently hold trial liability insurance coverage consistent with industry standards, this may not adequately cover all liabilities that we may incur.We also may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise in the future. We intendto expand our insurance coverage for products to include the sale of commercial products if we obtain marketing approval for our product candidates, but we maybe unable to obtain commercially reasonable product liability insurance. A successful product liability claim or series of claims brought against us, particularly ifjudgments exceed our insurance coverage, could decrease our cash and adversely affect our business and financial condition.Our relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse, transparency and other healthcare lawsand regulations as well as privacy and data security laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages,reputational harm, fines, exclusion from participation in government healthcare programs, curtailments or restrictions of our operations, administrativeburdens and diminished profits and future earnings.Healthcare providers, physicians and third-party payors play a primary role in the recommendation and prescription of any product candidates for which weobtain marketing approval. Our current and future arrangements with physicians, third-party payors and customers may expose us to broadly applicable fraud andabuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we conduct clinicalresearch and market, sell and distribute our products for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws andregulations, include, but are not limited to, the following: • the federal Anti-Kickback Statute prohibits persons from, among other things, knowingly and willfully soliciting, offering, receiving or providingremuneration, directly or indirectly, in cash or in kind, to 62Table of Contents induce or reward, or in return for, the referral of an individual for the furnishing or arranging for the furnishing, or the purchase, lease or order, orarranging for or recommending purchase, lease or order, or any good or service for which payment may be made under a federal healthcare programsuch as Medicare and Medicaid; • the federal false claims and civil monetary penalties laws, including the federal civil False Claims Act, imposes criminal and civil penalties, includingthrough civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federalgovernment, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money tothe federal government; • HIPAA imposes civil and criminal liability for, among other things, knowingly and willfully executing a scheme to defraud any healthcare benefitprogram, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a healthcare offense, knowingly and willfully making false statements relating to healthcare matters, or knowingly obtaining or disclosing individuallyidentifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA; • HIPAA also imposes obligations on certain covered entity health care providers, health plans and health care clearinghouses as well as their businessassociates that perform certain services involving the use or disclosure of individually identifiable health information with respect to safeguarding theprivacy, security and transmission of individually identifiable health information; • the federal Open Payments program, created as part of the Physician Payments Sunshine Act under Section 6002 of the Affordable Care Act and itsimplementing regulations, requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available underMedicare, Medicaid or the Children’s Health Insurance Program to report annually to the U.S. Department of Health and Human Services informationrelated to “payments or other transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors)and teaching hospitals and applicable manufacturers and applicable group purchasing organizations to report annually to the U.S. Department ofHealth and Human Services ownership and investment interests held by physicians (as defined above) and their immediate family members; and • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketingarrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; stateand foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and therelevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; stateand foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and otherhealthcare providers or marketing expenditures; state and foreign laws that govern the privacy and security of health information in certaincircumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating complianceefforts; and federal, state, and foreign laws that govern the privacy and security of other personal information, including federal and state consumerprotection laws, state data security laws, and data breach notification laws (a data breach affecting sensitive personal information, including healthinformation, could result in significant legal and financial exposure and reputational damages).Efforts to ensure that our business arrangements with third parties and our business generally, will comply with applicable healthcare laws and regulationswill involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes,regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any ofthese laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines,individual imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, contractual damages, 63Table of Contentsreputational harm, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolveallegations of non-compliance with these laws, and the curtailment or restructuring of our operations. Defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may bebrought against us, our business may be impaired. Further, if any physician or other healthcare provider or entity with whom we expect to do business is found notto be in compliance with applicable laws, that person or entity may be subject to criminal, civil or administrative sanctions, including exclusions from government-funded healthcare programs.Risks Related to Intellectual PropertyIf we are unable to obtain or protect intellectual property rights, we may not be able to compete effectively in our market.Our success depends in significant part on our and our licensors’ and licensees’ ability to establish, maintain and protect patents and other intellectualproperty rights and operate without infringing the intellectual property rights of others. We have filed patent applications both in the United States and in foreignjurisdictions to obtain patent rights to inventions we have discovered. We have also licensed from third parties rights to patent portfolios. Some of these licensesgive us the right to prepare, file and prosecute patent applications and maintain and enforce patents we have licensed, and other licenses may not give us suchrights.The patent prosecution process is expensive and time-consuming, and we and our current or future licensors and licensees may not be able to prepare, fileand prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we or our licensors or licensees willfail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protectionon them. Moreover, in some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain thepatents, covering technology that we license from or license to third parties and are reliant on our licensors or licensees. Therefore, these patents and applicationsmay not be prosecuted and enforced in a manner consistent with the best interests of our business. If our current or future licensors or licensees fail to establish,maintain or protect such patents and other intellectual property rights, such rights may be reduced or eliminated. If our licensors or licensees are not fullycooperative or disagree with us as to the prosecution, maintenance or enforcement of any patent rights, such patent rights could be compromised.The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has inrecent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our and our current or futurelicensors’ or licensees’ patent rights are highly uncertain. Our and our licensors’ or licensees’ pending and future patent applications may not result in patents beingissued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies andproducts. The patent examination process may require us or our licensors or licensees to narrow the scope of the claims of our or our licensors’ or licensees’pending and future patent applications, which may limit the scope of patent protection that may be obtained. It is possible that third parties with products that arevery similar to ours will circumvent our or our licensors’ or licensees’ patents by means of alternate designs or processes. We cannot be certain that we are the firstto invent the inventions covered by pending patent applications and, if we are not, we may be subject to priority disputes. We may be required to disclaim part orall of the term of certain patents or all of the term of certain patent applications. There may be prior art of which we are not aware that may affect the validity orenforceability of a patent claim. There also may be prior art of which we are aware, but which we do not believe affects the validity or enforceability of a claim,which may, nonetheless, ultimately be found to affect the validity or enforceability of a claim. No assurance can be given that if challenged, our patents would bedeclared by a court to be valid or enforceable or that even if found valid and enforceable, a competitor’s technology or product would be found by a court toinfringe our patents. We may analyze patents or patent applications of our competitors that we believe are relevant to our activities, and consider that we are free tooperate in relation to 64Table of Contentsour product candidate, but our competitors may achieve issued claims, including in patents we consider to be unrelated, which block our efforts or may potentiallyresult in our product candidate or our activities infringing such claims. The possibility exists that others will develop products which have the same effect as ourproducts on an independent basis which do not infringe our patents or other intellectual property rights, or will design around the claims of patents that we have hadissued that cover our products. Our and our licensors’ or licensees’ patent applications cannot be enforced against third parties practicing the technology claimed insuch applications unless and until a patent issues from such applications, and then only to the extent the issued claims cover the technology.Furthermore, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting suchcandidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us withsufficient rights to exclude others from commercializing products similar or identical to ours. Entinostat composition of matter U.S. Patent RE39,754, which welicensed from Bayer, covers the chemical entity of entinostat and any crystalline or non-crystalline form of entinostat and expires in September 2017. We expect toseek extensions of patent terms where these are available in any countries where we are prosecuting patents. This includes in the United States under the Drug PriceCompetition and Patent Term Restoration Act of 1984, which permits a patent term extension of up to five years beyond the expiration of the patent. However, theapplicable authorities, including the FDA in the United States, and any equivalent regulatory authorities in other countries, may not agree with our assessment ofwhether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request. If this occurs, ourcompetitors may take advantage of our investment in development and trials by referencing our clinical and preclinical data and launch their product earlier thanmight otherwise be the case. Even if we submit an NDA before the expiration of U.S. Patent RE39,754 and are successful in obtaining an extension of the term ofU.S. Patent RE39,754 based on FDA regulatory delays, such extension will only extend the term of RE39,754 for a few additional years (up to a maximum of fiveadditional years for patent claims covering a new chemical entity).The portfolio we licensed from Bayer also includes U.S. Patent 7,973,166, or the ‘166 patent, which covers a crystalline polymorph of entinostat which isreferred to as crystalline polymorph B, the crystalline polymorph used in the clinical development of entinostat. Many compounds can exist in different crystallineforms. A compound which in the solid state may exhibit multiple different crystalline forms is called polymorphic, and each crystalline form of the same chemicalcompound is termed a polymorph. A new crystalline form of a compound may arise, for example, due to a change in the chemical process or the introduction of animpurity. Such new crystalline forms may be patented. The ‘166 patent expires in 2029. On March 7, 2014, our licensor Bayer applied for reissue of the ‘166patent. The reissue application seeks to add three inventors not originally listed on the ‘166 patent. The reissue application does not seek to amend the claims issuedin the ‘166 patent. On April 28, 2015, the USPTO re-issued the ‘166 patent as U.S. patent RE45,499. RE45,499 reissued with the same claims originally issued inthe ‘166 patent and the list of inventors on RE45,499 now lists the additional three inventors that were not included on the ‘166 patent. The ‘166 patent has nowbeen surrendered in favor of RE45,499. RE45,499 has the same term as the initial term of the ‘166 patent, which expires in August 2029. After expiry of RE39,754in September 2017, a competitor may develop a competing polymorphic form other than based on polymorph B, which could compete with polymorph B.In spite of our efforts and efforts of our licensor, we may not be successful in defending the validity of the claims of the RE45,499 reissue patent or any of itsforeign counterparts. If the claims of the ‘166 patent or any of its counterparts are found to be invalid by a competent court, we may not be able to effectively blockentry of generic versions of our entinostat crystalline polymorph B candidate products into markets where the crystalline polymorph B patent claims are found to beinvalid.The portfolio we licensed from UCB includes patent applications with pending claims directed to the composition of matter of SNDX-6352 (a humanized,full-length IgG4 (kappa light chain) antibody with high affinity for the CSF-1R) as well as claims directed to methods of use of SNDX-6352. There is no guaranteethat 65Table of Contentsany patents will be granted based on the pending applications we licensed from UCB or even if one or more patents are granted that the claims issued in thosepatents would cover SNDX-6352 or methods of using SNDX-6352. Based on the priority date and filing date of the applications in the portfolio we licensed fromUCB, we expect that a patent, if any, granted based on the currently pending applications would expire in 2034. The actual term of any patents granted based on thepending applications we licensed from UCB can only be determined after such patents are actually granted.We may not be able to protect our intellectual property rights throughout the world.Filing, prosecuting, enforcing and defending patents on product candidates in all countries throughout the world is prohibitively expensive, and our or ourlicensors’ intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of someforeign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we and our licensorsmay not be able to prevent third parties from practicing our and our licensors’ inventions in countries outside the United States, or from selling or importingproducts made using our and our licensors’ inventions in and into the United States or other jurisdictions. Competitors may use our and our licensors’ technologiesin jurisdictions where we have not obtained patent protection to develop their own products and may export otherwise infringing products to territories where weand our licensors have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our product candidates andour and our licensors’ patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems ofcertain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly thoserelating to biopharmaceuticals, which could make it difficult for us and our licensors to stop the infringement of our and our licensors’ patents or marketing ofcompeting products in violation of our and our licensors’ proprietary rights generally. Proceedings to enforce our and our licensors’ patent rights in foreignjurisdictions could result in substantial costs and divert our attention from other aspects of our business, could put our and our licensors’ patents at risk of beinginvalidated or interpreted narrowly and our and our licensors’ patent applications at risk of not issuing and could provoke third parties to assert claims against us orour licensors. We or our licensors may not prevail in any lawsuits that we or our licensors initiate and the damages or other remedies awarded, if any, may not becommercially meaningful.The requirements for patentability may differ in certain countries, particularly developing countries. For example, unlike other countries, China has aheightened requirement for patentability, and specifically requires a detailed description of medical uses of a claimed drug. In India, unlike the United States, thereis no link between regulatory approval of a drug and its patent status. Furthermore, generic drug manufacturers or other competitors may challenge the scope,validity or enforceability of our or our licensors’ patents, requiring us or our licensors to engage in complex, lengthy and costly litigation or other proceedings.Generic drug manufacturers may develop, seek approval for, and launch generic versions of our products. In addition to India, certain countries in Europe anddeveloping countries, including China, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In thosecountries, we and our licensors may have limited remedies if patents are infringed or if we or our licensors are compelled to grant a license to a third party, whichcould materially diminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our and our licensors’ efforts to enforceintellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license.If we breach our license agreement with Bayer related to entinostat or if the license agreement is otherwise terminated, we could lose the ability to continue thedevelopment and commercialization of entinostat.Our commercial success depends upon our ability to develop, manufacture, market and sell entinostat. In March 2007, we entered into a license,development and commercialization agreement, or the Bayer license 66Table of Contentsagreement, with Bayer pursuant to which we obtained a worldwide, exclusive license to develop and commercialize entinostat and any other products containingthe same active ingredient. The Bayer license agreement, as amended, permits us to use entinostat or other licensed products under the Bayer license agreement forthe treatment of any human disease, and we are obligated to use commercially reasonable efforts to develop, manufacture and commercialize licensed products forall commercially reasonable indications.We are obligated to pay Bayer up to approximately $50 million in the aggregate upon obtaining certain milestones in the development and marketingapproval of entinostat, assuming that we pursue at least two different indications for entinostat or any other licensed product under the Bayer license agreement. Weare also obligated to pay Bayer $100 million in aggregate sales milestones, and a tiered, single-digit royalty on net sales by us, our affiliates and sublicensees ofentinostat and any other licensed products under the Bayer license agreement. We are obligated to pay Bayer these royalties on a country-by-country basis for thelife of the relevant licensed patents covering such product or 15 years after the first commercial sale of such product in such country, whichever is longer. Wecannot determine the date on which our royalty payment obligations to Bayer would expire because no commercial sales of entinostat have occurred and the last-to-expire relevant patent covering entinostat in a given country may change in the future.The Bayer license agreement will remain in effect until the expiration of our royalty obligations under the agreement in all countries. Either party mayterminate the Bayer license agreement in its entirety or with respect to certain countries in the event of an uncured material breach by the other party. Either partymay terminate the Bayer license agreement if voluntary or involuntary bankruptcy proceedings are instituted against the other party, if the other party makes anassignment for the benefit of creditors, or upon the occurrence of other specific events relating to the insolvency or dissolution of the other party. Bayer mayterminate the Bayer license agreement if we seek to revoke or challenge the validity of any patent licensed to us by Bayer under the Bayer license agreement or ifwe procure or assist a third party to take any such action.If the Bayer license agreement is terminated, we would not be able to develop, manufacture, market or sell entinostat and would need to negotiate a new orreinstated agreement, which may not be available to us on equally favorable terms, or at all.If we breach the UCB license agreement related to SNDX-6352 or if the UCB license agreement is otherwise terminated, we could lose the ability to continuethe development and commercialization of SNDX-6352.Our commercial success depends upon our ability to develop, manufacture, market and sell SNDX-6352. Subject to the achievement of certain milestoneevents, we may be required to pay UCB up to $119.5 million in one-time development and regulatory milestone payments over the term of the UCB licenseagreement. In the event that we or any of our affiliates or sublicensees commercializes SNDX-6352, we will also be obligated to pay UCB low double-digitroyalties on sales, subject to reduction in certain circumstances, as well as up to an aggregate of $250 million in potential one-time sales-based milestone paymentsbased on achievement of certain annual sales thresholds. Under certain circumstances, we may be required to share a percentage of non-royalty income fromsublicensees, subject to certain deductions, with UCB.Either party may terminate the UCB license agreement in its entirety or with respect to certain countries in the event of an uncured material breach by theother party. Either party may terminate the UCB license agreement if voluntary or involuntary bankruptcy proceedings are instituted against the other party, if theother party makes an assignment for the benefit of creditors, or upon the occurrence of other specific events relating to the insolvency or dissolution of the otherparty. UCB may terminate the UCB license agreement if we seek to revoke or challenge the validity of any patent licensed to us by UCB under the UCB licenseagreement or if we procure or assist a third party to take any such action.Unless terminated earlier in accordance with its terms, the UCB license agreement will continue on a country-by-country and product-by-product basis untilthe later of: (i) the expiration of all of the licensed patent rights in such country; (ii) the expiration of all regulatory exclusivity applicable to the product in suchcountry; and 67Table of Contents(iii) 10 years from the date of the first commercial sale of the product in such country. We cannot determine the date on which our royalty payment obligations toUCB would expire because no commercial sales of SNDX-6352 have occurred and the last-to-expire relevant patent covering SNDX-6352 in a given country maychange in the future.If the UCB license agreement is terminated, we would not be able to develop, manufacture, market or sell SNDX-6352 and would need to negotiate a new orreinstated agreement, which may not be available to us on equally favorable terms, or at all.Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.As is the case with other biotechnology and pharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents.Obtaining and enforcing patents in the biopharmaceutical industry involve technological and legal complexity, and obtaining and enforcing biopharmaceuticalpatents is costly, time-consuming, and inherently uncertain. The Supreme Court has ruled on several patent cases in recent years, either narrowing the scope ofpatent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regardto our and our licensors’ ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained.Depending on decisions by Congress, the federal courts, and the U.S. Patent and Trademark Office, or USPTO, the laws and regulations governing patents couldchange in unpredictable ways that may weaken our and our licensors’ ability to obtain new patents or to enforce existing patents and patents we and our licensors orcollaborators may obtain in the future. In view of recent developments in U.S. patent laws, in spite of our efforts and the efforts of our licensors, we may facedifficulties in obtaining allowance of our biomarker based patient selection patent claims or if we are successful in obtaining allowance of our biomarker basedpatient selection claims, we or our licensor may be unsuccessful in defending the validity of such claims if challenged before a competent court.Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our and our licensors’ patent applications and theenforcement or defense of our or our licensors’ issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the America Invents Act, wassigned into law. The America Invents Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patentapplications are prosecuted and may also affect patent litigation. The USPTO recently developed new regulations and procedures to govern administration of theAmerican Invents Act, and many of the substantive changes to patent law associated with the America Invents Act and in particular, the first to file provisions, onlybecame effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the America Invents Act will have on the operation of our business. However,the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our or our licensors’ patent applicationsand the enforcement or defense of our or our licensors’ issued patents, all of which could harm our business and financial condition.Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirementsimposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.Periodic maintenance and annuity fees on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime ofthe patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and othersimilar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means inaccordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting inpartial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patentapplication include failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formaldocuments. If we 68Table of Contentsor our licensors fail to maintain the patents and patent applications covering our product candidates, our competitors might be able to enter the market, which wouldharm our business.We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time-consuming and unsuccessful and have anadverse effect on the success of our business and on our stock price.Third parties may infringe our or our licensors’ patents or misappropriate or otherwise violate our or our licensors’ intellectual property rights. In the future,we or our licensors may initiate legal proceedings to enforce or defend our or our licensors’ intellectual property rights, to protect our or our licensors’ trade secretsor to determine the validity or scope of intellectual property rights we own or control. Also, third parties may initiate legal proceedings against us or our licensors tochallenge the validity or scope of intellectual property rights we own or control. The proceedings can be expensive and time-consuming and many of our or ourlicensors’ adversaries in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these legal actions than we or ourlicensors can. Accordingly, despite our or our licensors’ efforts, we or our licensors may not be able to prevent third parties from infringing upon ormisappropriating intellectual property rights we own or control, particularly in countries where the laws may not protect our rights as fully as in the United States.Litigation could result in substantial costs and diversion of management resources, which could harm our business and financial results. In addition, in aninfringement proceeding, a court may decide that a patent owned by or licensed to us is invalid or unenforceable, or may refuse to stop the other party from usingthe technology at issue on the grounds that our or our licensors’ patents do not cover the technology in question. An adverse result in any litigation proceedingcould put one or more of our or our licensors’ patents at risk of being invalidated, held unenforceable or interpreted narrowly.Third-party preissuance submission of prior art to the USPTO, or opposition, derivation, reexamination, inter partes review or interference proceedings, orother preissuance or post-grant proceedings in the United States or other jurisdictions provoked by third parties or brought by us or our licensors or collaboratorsmay be necessary to determine the priority of inventions with respect to our or our licensors’ patents or patent applications. An unfavorable outcome could requireus or our licensors to cease using the related technology and commercializing our product candidates, or to attempt to license rights to it from the prevailing party.Our business could be harmed if the prevailing party does not offer us or our licensors a license on commercially reasonable terms or at all. Even if we or ourlicensors obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us or our licensors. In addition, if thebreadth or strength of protection provided by our or our licensors’ patents and patent applications is threatened, it could dissuade companies from collaboratingwith us to license, develop or commercialize current or future product candidates. Even if we successfully defend such litigation or proceeding, we may incursubstantial costs and it may distract our management and other employees. We could be found liable for monetary damages, including treble damages andattorneys’ fees, if we are found to have willfully infringed a patent.Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of ourconfidential information could be compromised by disclosure during this process. There could also be public announcements of the results of hearings, motions orother interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a downward effect on the price ofshares of our common stock.Third parties may initiate legal proceedings against us alleging that we infringe their intellectual property rights or we may initiate legal proceedings againstthird parties to challenge the validity or scope of intellectual property rights controlled by third parties, the outcome of which would be uncertain and couldhave an adverse effect on the success of our business.Third parties may initiate legal proceedings against us or our licensors or collaborators alleging that we or our licensors or collaborators infringe theirintellectual property rights or we or our licensors or collaborators 69Table of Contentsmay initiate legal proceedings against third parties to challenge the validity or scope of intellectual property rights controlled by third parties, including inoppositions, interferences, reexaminations, inter partes reviews or derivation proceedings before the United States or other jurisdictions. These proceedings can beexpensive and time-consuming and many of our or our licensors’ adversaries in these proceedings may have the ability to dedicate substantially greater resources toprosecuting these legal actions than we or our licensors or collaborators can.An unfavorable outcome could require us or our licensors or collaborators to cease using the related technology or developing or commercializing ourproduct candidates, or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us or ourlicensors or collaborators a license on commercially reasonable terms or at all. Even if we or our licensors or collaborators obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us or our licensors or collaborators. In addition, we could be found liable formonetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent. A finding of infringement could prevent usfrom commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business.We may be subject to claims by third parties asserting that we or our employees have misappropriated their intellectual property, or claiming ownership of whatwe regard as our own intellectual property.Many of our employees, including our senior management, were previously employed at universities or at other biotechnology or pharmaceutical companies,including our competitors or potential competitors. Some of these employees executed proprietary rights, non-disclosure and non-competition agreements inconnection with such previous employment. Although we try to ensure that our employees do not use the proprietary information or know-how of others in theirwork for us, we may be subject to claims that we or these employees have used or disclosed confidential information or intellectual property, including trade secretsor other proprietary information, of any such employee’s former employer. Litigation may be necessary to defend against these claims.In addition, for some of our in-licensed patents and patent applications, we do not have access to any patent assignments or employee agreementsdemonstrating that all inventors have assigned their rights to the inventions or related patents. As a result, we may be subject to claims of ownership by suchinventors.If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights orpersonnel or sustain damages. Such intellectual property rights could be awarded to a third party, and we could be required to obtain a license from such third partyto commercialize our technology or products. Such a license may not be available on commercially reasonable terms or at all. Even if we successfully prosecute ordefend against such claims, litigation could result in substantial costs and distract management.Our inability to protect our confidential information and trade secrets would harm our business and competitive position.In addition to seeking patents for some of our technology and products, we also rely on trade secrets, including unpatented know-how, technology and otherproprietary information, to maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentialityagreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, third-party manufacturers,consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants.Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be ableto obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts both within and outside the United States may be less willing 70Table of Contentsor unwilling to protect trade secrets. If a competitor lawfully obtained or independently developed any of our trade secrets, we would have no right to prevent suchcompetitor from using that technology or information to compete with us, which could harm our competitive position.Risks Related to Ownership of Our Common StockThe market price of our stock may be volatile and you could lose all or part of your investment.The trading price of our common stock is highly volatile and subject to wide fluctuations in response to various factors, some of which we cannot control. Inaddition to the factors discussed in this “Risk Factors” section and elsewhere in this report, these factors include: • the success of competitive products or technologies; • regulatory actions with respect to our products or our competitors’ products; • actual or anticipated changes in our growth rate relative to our competitors; • announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures, collaborations or capital commitments; • results of trials of our product candidates or those of our competitors; • regulatory or legal developments in the United States and other countries; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • the level of expenses related to our product candidates or clinical development programs; • actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; • variations in our financial results or those of companies that are perceived to be similar to us; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • announcement or expectation of additional financing efforts; • sales of our common stock by us, our insiders or our other stockholders; • changes in the structure of healthcare payment systems; • market conditions in the pharmaceutical and biotechnology sectors; and • general economic, industry, political and market conditions.In addition, the stock market in general, and the NASDAQ Global Select Market and biopharmaceutical companies in particular, frequently experiencesextreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies. Broad market andindustry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. The realization of any of the aboverisks or any of a broad range of other risks, including those described in this “Risk Factors” section, could have a dramatic and negative impact on the market priceof our common stock.We may sell additional equity or debt securities or enter into other arrangements to fund our operations, which may result in dilution to our stockholders andimpose restrictions or limitations on our business.Until we can generate a sufficient amount of revenue from our products, if ever, we expect to finance future cash needs through public or private equity ordebt offerings. We may also seek additional funding through 71Table of Contentsgovernment or other third-party funding and other collaborations, strategic alliances and licensing arrangements. These financing activities may have an adverseimpact on our stockholders’ rights as well as on our operations, and such additional funding may not be available on reasonable terms, if at all. If we raiseadditional funds through the issuance of additional debt or equity securities, it may result in dilution to our existing stockholders and/or increased fixed paymentobligations. Furthermore, these securities may have rights senior to those of our common stock and could contain covenants that would restrict our operations andpotentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectualproperty rights and other operating restrictions that could adversely impact our ability to conduct our business. Additionally, if we seek funds through arrangementswith collaborative partners, these arrangements may require us to relinquish rights to some of our technologies or product candidates or otherwise agree to termsunfavorable to us. Any of these events could significantly harm our business, financial condition and prospects.If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock,our stock price and trading volume could decline.The trading market for our common stock is influenced by the research and reports that industry or securities analysts publish about us or our business. If noor few securities or industry analysts commence coverage of us, the trading price for our stock could be negatively impacted. In the event we obtain securities orindustry analyst coverage, if any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property orour stock performance, or if our trials or operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of theseanalysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price ortrading volume to decline.Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject tostockholder approval.As of December 31, 2016, our executive officers, directors, holders of 5% or more of our capital stock and their respective affiliates beneficially ownapproximately 74% of our outstanding voting stock. These stockholders may be able to determine all matters requiring stockholder approval. For example, thesestockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets or other majorcorporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest asone of our stockholders. The interests of this group of stockholders may not always coincide with your interests or the interests of other stockholders and they mayact in a manner that advances their best interests and not necessarily those of other stockholders, including seeking a premium value for their common stock, andmight affect the prevailing market price for our common stock.We are an “emerging growth company” as defined in the JOBS Act and will be able to avail ourselves of reduced disclosure requirements applicable toemerging growth companies, which could make our common stock less attractive to investors and adversely affect the market price of our common stock.For so long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from variousrequirements applicable to public companies that are not “emerging growth companies” including: • the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requiring that our independent registered publicaccounting firm provide an attestation report on the effectiveness of our internal control over financial reporting; • the “say on pay” provisions (requiring a non-binding stockholder vote to approve compensation of certain executive officers) and the “say on goldenparachute” provisions (requiring a non-binding 72Table of Contents stockholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other businesscombinations) of the Dodd-Frank Act and some of the disclosure requirements of the Dodd-Frank Act relating to compensation of our chief executiveofficer; • the requirement to provide detailed compensation discussion and analysis in proxy statements and reports filed under the Securities Exchange Act of1934, as amended, or the Exchange Act, and instead provide a reduced level of disclosure concerning executive compensation; and • any rules that the Public Company Accounting Oversight Board may adopt requiring mandatory audit firm rotation or a supplement to the auditor’sreport on the financial statements.We may take advantage of these exemptions until we are no longer an “emerging growth company.” We would cease to be an “emerging growth company”upon the earliest of: (i) the first fiscal year following the fifth anniversary of our IPO; (ii) the first fiscal year after our annual gross revenues are $1.0 billion ormore; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) as of the end ofany fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year.We currently intend to take advantage of some, but not all, of the reduced regulatory and reporting requirements that will be available to us so long as wequalify as an “emerging growth company.” For example, we have irrevocably elected not to take advantage of the extension of time to comply with new or revisedfinancial accounting standards available under Section 102(b) of the JOBS Act. Our independent registered public accounting firm will not be required to providean attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as an “emerging growth company,” which mayincrease the risk that material weaknesses or significant deficiencies in our internal control over financial reporting go undetected. Likewise, so long as we qualifyas an “emerging growth company,” we may elect not to provide you with certain information, including certain financial information and certain informationregarding compensation of our executive officers, that we would otherwise have been required to provide in filings we make with the Securities and ExchangeCommission, or SEC, which may make it more difficult for investors and securities analysts to evaluate our company. We cannot predict if investors will find ourcommon stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a lessactive trading market for our common stock, and our stock price may be more volatile and may decline.We will incur increased costs as a result of operating as a public company, and our management will devote substantial time to new compliance initiatives.As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company, and these expenses mayincrease even more after we are no longer an “emerging growth company.” We are subject to the reporting requirements of the Exchange Act, the Sarbanes-OxleyAct, the Dodd-Frank Wall Street Reform and Protection Act, as well as rules adopted, and to be adopted, by the SEC and the NASDAQ Global Select Market. Ourmanagement and other personnel needs to devote a substantial amount of time to these compliance initiatives. Moreover, we expect these rules and regulations tosubstantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly. The increased costs will increase ournet loss. For example, these rules and regulations have made it more difficult and more expensive for us to obtain director and officer liability insurance and wewere required to incur substantial costs to maintain the sufficient coverage. We cannot predict or estimate the amount or timing of additional costs we may incur torespond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our boardof directors, our board committees or as executive officers. 73Table of ContentsSales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market thatthe holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.Some of the holders of our securities have rights, subject to certain conditions, to require us to file registration statements covering their shares or to includetheir shares in registration statements that we may file for ourselves or other stockholders. Registration of these shares under the Securities Act would result in theshares becoming freely tradable without restriction under the Securities Act except for shares held by our affiliates, as defined in Rule 144 under the Securities Act.Any sales of securities by these stockholders could have a material adverse effect on the trading price of our common stock.We may be subject to securities litigation, which is expensive and could divert management attention.The market price of our common stock may be volatile, and in the past, companies that have experienced volatility in the market price of their stock havebeen subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantialcosts and divert our management’s attention from other business concerns, which could seriously harm our business.If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately report our financialcondition, results of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our common stock.The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls andprocedures. Commencing after the filing of our initial annual report on Form 10-K, we will be required, under Section 404 of the Sarbanes-Oxley Act, to furnish areport by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment will need to include disclosure ofany material weaknesses identified by our management in our internal control over financial reporting. A material weakness is a deficiency, or combination ofdeficiencies, in internal control over financial reporting that results in more than a reasonable possibility that a material misstatement of annual or interim financialstatements will not be prevented or detected on a timely basis. Section 404 of the Sarbanes-Oxley Act also generally requires an attestation from our independentregistered public accounting firm on the effectiveness of our internal control over financial reporting. However, for as long as we remain an emerging growthcompany as defined in the JOBS Act, we intend to take advantage of the exemption permitting us not to comply with the independent registered public accountingfirm attestation requirement.Our compliance with Section 404 will require that we incur substantial expense and expend significant management efforts. We currently do not have aninternal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accountingknowledge, and compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404. We may not be able tocomplete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more materialweaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. We cannotassure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintaininternal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we areunable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have amaterial weakness or significant deficiency in our internal control over financial reporting once that firm begin its Section 404 reviews, we could lose investorconfidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions orinvestigations by the NASDAQ Global Select 74Table of ContentsMarket, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement ormaintain other effective control systems required of public companies, could also restrict our future access to the capital markets.Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if anacquisition would benefit our stockholders and may prevent attempts by our stockholders to replace or remove our current management.Provisions in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could make itmore difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, or remove our currentmanagement. These provisions include: • authorizing the issuance of “blank check” preferred stock, the terms of which we may establish and shares of which we may issue without stockholderapproval; • prohibiting cumulative voting in the election of directors, which would otherwise allow for less than a majority of stockholders to elect directorcandidates; • prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders; • eliminating the ability of stockholders to call a special meeting of stockholders; and • establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon atstockholder meetings.These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult forstockholders to replace members of our board of directors, who are responsible for appointing the members of our management. Because we are incorporated inDelaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, or the DGCL, which may discourage, delay or preventsomeone from acquiring us or merging with us whether or not it is desired by or beneficial to our stockholders. Under the DGCL, a corporation may not, in general,engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, theboard of directors has approved the transaction. Any provision of our amended and restated certificate of incorporation or amended and restated bylaws orDelaware law that has the effect of delaying or deterring a change of control could limit the opportunity for our stockholders to receive a premium for their sharesof our common stock, and could also affect the price that some investors are willing to pay for our common stock.Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesOur headquarters is currently located in Waltham, Massachusetts, and consists of 12,207 square feet of leased office space under a lease that expires onMarch 1, 2022. We also have 4,039 square feet of leased office space in New York, New York, under a lease that expires on February 28, 2021. We believe thatour existing facilities are sufficient for our needs for the foreseeable future. If we determine that additional or new facilities are needed in the future, we believe thatsufficient options would be available to us on commercially reasonable terms.Item 3. Legal ProceedingsWe are not currently a party to any material legal proceedings.Item 4. Mine Safety DisclosuresNot applicable. 75Table of ContentsP ART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket InformationOur common stock began trading on the NASDAQ Global Select Market on March 2, 2016, under the symbol “SNDX.” Prior to that time, there was nopublic market for our common stock. The following table sets forth the high and low closing sales prices per share of our common stock as reported on TheNASDAQ Global Select Market for the periods indicated. Year Ended December 31, 2016 High Low First Quarter (Beginning March 2, 2016) $14.83 $11.00 Second Quarter $16.60 $9.06 Third Quarter $17.13 $9.80 Fourth Quarter $16.07 $6.91 Comparative Stock Performance GraphThe following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such informationbe incorporated by reference into any future filing under the Securities Act or Exchange Act. The following graph shows a comparison from March 2, 2016 (thedate our common stock commenced trading on the NASDAQ Global Select Market) through December 31, 2016, of the cumulative total return for our commonstock, the NASDAQ Composite Index, and the NASDAQ Biotechnology 76Table of ContentsIndex. The graph assumes an initial investment of $100 on March 2, 2016. The comparisons in the graph are not intended to forecast or be indicative of possiblefuture performance of our common stock. *$100 invested on 3/2/16 in stock or 2/29/16 in index, including reinvestment of dividends.Fiscalyear ending December 31. 2-Mar-16 31-Mar-16 30-Apr-16 31-May-16 30-Jun-16 31-Jul-16 31-Aug-16 30-Sep-16 31-Oct-16 30-Nov-16 31-Dec-16 Syndax Pharmaceuticals, Inc. $100.00 $111.00 $114.08 $114.50 $82.08 $103.50 $118.17 $126.33 $98.42 $80.67 $59.75 NASDAQ Composite $100.00 $106.98 $104.96 $108.85 $106.51 $113.48 $114.72 $116.91 $114.08 $117.06 $118.41 NASDAQ Biotechnology $100.00 $103.10 $105.39 $108.64 $100.90 $111.50 $108.44 $110.93 $98.87 $105.03 $102.40 Holders of RecordAs of March 7, 2017, we had approximately 34 holders of record of our common stock. Certain shares are held in “street” name and accordingly, the numberof beneficial owners of such shares is not known or included in the foregoing number. This number of holders of record also does not include stockholders whoseshares may be held in trust by other entities.Dividend PolicyWe have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings to fund the development and growthof our business. We do not expect to pay any cash dividends in the foreseeable future. Any future determination to pay dividends will be made at the discretion ofour board of directors and will depend on then-existing conditions, including our financial conditions, operating results, contractual restrictions, capitalrequirements, business prospects and other factors our board of directors may deem relevant. 77Table of ContentsUse of ProceedsIn March 2016, we completed our initial public offering, or IPO, pursuant to a registration statement on Form S-1 (File No. 333-208861), which the SECdeclared effective on March 2, 2016. In our IPO, we issued and sold 4,809,475 shares of common stock (inclusive of 409,475 shares of common stock sold by uspursuant to the partial exercise of an overallotment option granted to the underwriters in connection with the offering) at a public offering price of $12.00 per share.The aggregate net proceeds received by us from our IPO were $50.5 million, net of underwriting discounts and commissions and offering expenses payable by us.No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning 10% or more of any class of ourequity securities or to any other affiliates. The managing underwriters for our IPO were Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., JPM SecuritiesLLC, and Oppenheimer & Co. Inc.There has been no material change in the use of proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b)(4) onMarch 2, 2016. We invested the funds received in cash equivalents and other short-term investments in accordance with our investment policy. As of December 31,2016, we have not used any of the proceeds from the IPO and as such, the entire amount of the net proceeds is included as cash, cash equivalents and short-terminvestments.Item 6. S elected Financial DataThe following table sets forth our selected consolidated financial data. We derived the consolidated statement of operations data for the years endedDecember 31, 2016, 2015, and 2014 and the consolidated balance sheet data as of December 31, 2016 and 2015, from our audited consolidated financialstatements, included elsewhere in this Annual Report on Form 10-K. We have derived the consolidated balance sheet data as of December 31, 2014 from ouraudited financial statements not included in this report. Our historical results are not necessarily indicative of results to be expected for any period in the future.The selected consolidated financial data presented below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition andResults of Operations” and our consolidated financial statements and the related notes thereto, included elsewhere in this Annual Report on Form 10-K. Theselected consolidated financial data in this section is not intended to replace our consolidated financial statements and the related notes thereto.Consolidated Statement of Operations Data: Years Ended December 31, (In thousands, except share and per share data) 2016 2015 2014 Revenue $1,220 $627 $— Operating expenses: Research and development 31,665 9,549 10,175 General and administrative 13,321 11,591 11,157 Total operating expenses 44,986 21,140 21,332 Loss from operations (43,766) (20,513) (21,332) Interest income (expense) 956 (1,414) (289) Other (expense) income (1,662) (2,192) 1,793 Net loss $(44,472) $(24,119) $(19,828) Net loss attributable to common stockholders (1) $(47,070) $(103,845) $(26,357) Net loss per share attributable to common stockholders—basic and diluted (1) $(3.22) $(1,519.27) $(453.02) Weighted-average common shares outstanding—basic and diluted (1) 14,619,716 68,352 58,181 78Table of ContentsConsolidated Balance Sheet Data: December 31, 2016 2015 2014 (In thousands) Cash, cash equivalents and short-term investments $105,330 $86,489 $12,091 Working capital (2) 98,144 83,160 2,181 Total assets (2) 109,013 89,903 12,525 Convertible preferred stock — 319,113 146,853 Accumulated deficit (305,293) (259,675) (159,801) Total stockholders’ equity (deficit) 84,139 (252,415) (152,569) (1) See Note 4 to our consolidated financial statements included elsewhere herein for an explanation of the method used to compute basic and diluted net lossand net loss per share and the weighted-average number of shares used in the computation of the per share amounts. (2) Working capital and total assets for 2014 have been restated for the adoption of Accounting Standards Update 2015-03, Interest—Imputation of Interest(Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The impact of adoption was an increase of $83,000 in working capital and adecrease of $291,000 in total assets.Item 7. Management’s Discussion and Analys is of Financial Condition and Results of OperationsThe following discussion and analysis should be read in conjunction with “Selected Financial Data” and our consolidated financial statements and relatednotes included elsewhere in this Annual Report on Form 10-K. This discussion and analysis and other parts of this Annual Report on Form 10-K contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans,objectives, expectations, intentions and projections. Our actual results and the timing of selected events could differ materially from those anticipated in theseforward-looking statements as a result of several factors, including those set forth under “Risk Factors” and elsewhere in this Annual Report on Form 10-K. Youshould carefully read the “Risk Factors” section of this Annual Report on Form 10-K to gain an understanding of the important factors that could cause actualresults to differ materially from our forward-looking statements. Please also see the section entitled “Special Note Regarding Forward-Looking Statements.”OverviewWe are a clinical stage biopharmaceutical company developing an innovative pipeline of combination therapies in multiple cancer indications. Our leadproduct candidate, entinostat, is currently being evaluated in a Phase 3 clinical trial for HR+, HER2- breast cancer. Entinostat was granted Breakthrough Therapydesignation by the FDA, following positive results from our Phase 2b clinical trial, ENCORE 301. We are developing entinostat, which has direct effects on bothcancer cells and immune regulatory cells, and SNDX-6352, a monoclonal antibody that targets the colony stimulating factor-1 receptor, or CSF-1R, to enhance thebody’s immune response on tumors that have shown sensitivity to immunotherapy. We are evaluating entinostat as a combination therapeutic in Phase 1b/2 clinicaltrials with Merck for NSCLC and melanoma; with Genentech for TNBC; and with Merck KGaA and Pfizer for ovarian cancer. We acquired the exclusive rights toSNDX-6352 in July 2016 and are evaluating SNDX-6352 in a single ascending dose Phase 1 clinical trial. We plan to continue to leverage the technical andbusiness expertise of our management team and scientific collaborators to license, acquire and develop additional cancer therapies to expand our pipeline.On February 24, 2016, we effected a 1-for-1.25 reverse stock split of our outstanding common stock and convertible preferred stock; on June 3, 2014, weeffected a 1-for-12.3 reverse stock split of our outstanding common stock and convertible preferred stock; and on November 18, 2013, we effective a 1-for-10reverse stock split of our outstanding common stock and convertible preferred stock. Stockholders entitled to fractional shares 79Table of Contentsas a result of the reverse stock splits received a cash payment in lieu of receiving fractional shares. All of our historical share and per share information shown inthe accompanying financial statements and related notes have been retroactively adjusted to give effect to the reverse stock splits.In March 2016, we completed our IPO, whereby we sold 4,809,475 shares of common stock at the initial public offering price of $12.00 per share, whichincluded 409,475 shares issued pursuant to the underwriters’ partial exercise of their over-allotment option to purchase additional shares of common stock. Wereceived net proceeds of $50.5 million from the offering, after deducting underwriting discounts and commissions and other offering costs. Our shares trade on theNasdaq Global Select Market under the symbol “SNDX.”We have no products approved for commercial sale and have not generated any product revenues from product sales to date. We continue to incur significantresearch and development and other expenses related to our ongoing operations. As a result, we are not and have never been profitable and have incurred losses ineach period since our inception in 2005. For the years ended December 31, 2016, 2015, and 2014, we reported a net loss of $44.5 million, $24.1 million and $19.8million, respectively. As of December 31, 2016, we had an accumulated deficit of $305.3 million, which included non-cash charges for stock-based compensation,preferred stock accretion and extinguishment charges. As of December 31, 2016, we had cash, cash equivalents and short-term investments of $105.3 million.Pipeline Updates • E2112 is approximately 64% enrolled. Based upon current enrollment trends, ECOG-ACRIN anticipates enrollment could be completed andprogression-free survival data available by the end of 2017. • During the fourth quarter of 2016, we commenced the single ascending dose in the Phase 1 clinical trial of SNDX-6352 in healthy volunteers todetermine the safety and pharmacokinetics of the anti-CSF-1R monoclonal antibody. • We have completed enrollment of the three cohorts in the first stage of the Phase 2 component of ENCORE 601 in patients with melanoma andNSCLC. ENCORE 601 is an open-label, Phase 1b/2 clinical trial evaluating the combination of entinostat plus Merck’s anti-PD-1 blocking therapy,Keytruda , in patients with melanoma and NSCLC to provide an initial efficacy signal across three defined patient populations. In February 2017, themelanoma cohort of the 601 trial met the pre-specified objective response threshold; and we progressed to the second stage of the trial. This cohortwill now enroll an additional 21 patients. Data from Stage 1 of the other two cohorts is still maturing, and we expect to have a decision regarding ago/no go decision into Stage 2 for these cohorts in the first half of 2017. • In June 2016, we initiated the Phase 1b portion of ENCORE 602 in patients with TNBC. This phase of the study completed enrollment during thefourth quarter of 2016, establishing the 5 mg weekly dose of entinostat safe to go forward in the recently initiated phase 2 portion of the trial. • In collaboration with Merck KGaA and Pfizer, we initiated ENCORE 603 in January 2017 and expect safety data from the Phase 1b safety portionduring the first half of 2017.Financial OverviewRevenueTo date, we have not generated any product revenues. Our ability to generate revenue and become profitable depends upon our ability to obtain marketingapproval of and successfully commercialize our product candidates. Our revenues for the years ended December 31, 2016 and 2015 have been solely derived fromour license agreement with KHK under which we granted KHK an exclusive license to develop and commercialize 80Table of Contentsentinostat in Japan and Korea, or the KHK license agreement. In 2015, we received a $25.0 million upfront payment from KHK, inclusive of an equity investment.We allocated $17.3 million of the upfront payment to the license fee, and such fee is being recognized as revenue ratably over our expected service period(currently expected to be through 2029) commencing on the date of the first delivery of the clinical trial materials, which occurred in June 2015. The balance of theupfront payment of $7.7 million was allocated to KHK’s purchase of shares of our Series B-1 convertible preferred stock. We did not have any revenue for the yearended December 31, 2014.Research and DevelopmentSince our inception, we have primarily focused on our clinical development programs. Research and development expenses consist primarily of costsincurred for the development of our product candidates and include: • expenses incurred under agreements related to our clinical trials, including the costs for investigative sites and CROs, that conduct our clinical trials; • employee-related expenses associated with our research and development activities, including salaries, benefits, travel and non-cash stock-basedcompensation expenses; • manufacturing process-development, clinical supplies and technology-transfer expenses; • license fees and milestone payments under our license agreements; • consulting fees paid to third parties; • allocated facilities and overhead expenses; and • costs associated with regulatory operations and regulatory compliance requirements.Internal and external research and development costs are expensed as they are incurred. Cost-sharing amounts received by us are recorded as reductions toresearch and development expense. Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress tocompletion of specific tasks using data such as patient enrollment, clinical site activations or other information provided to us by our vendors.Research and development activities are central to our business model. Drug candidates in late stages of clinical development generally have higherdevelopment costs than those in earlier stages of clinical development, primarily due to the increased size and duration of late-stage clinical trials. We plan toincrease our research and development expenses for the foreseeable future as we continue to advance the development of our product candidates. The amount ofresearch and development expenses allocated to external spending will continue to grow, while we expect our internal spending to grow at a slower and morecontrolled pace. From inception through December 31, 2016, we have incurred $103.4 million in research and development expenses.It is difficult to determine, with certainty, the duration and completion costs of our current or future preclinical programs, clinical studies and clinical trials ofour product candidates. The duration, costs and timing of clinical studies and clinical trials of our product candidates will depend on a variety of factors thatinclude, but are not limited to, the following: • per patient costs; • the number of patients that participate; • the number of sites; • the countries in which the studies and trials are conducted; • the length of time required to enroll eligible patients; 81Table of Contents • the potential additional safety monitoring or other studies requested by regulatory agencies; • the duration of patient monitoring; • the efficacy and safety profile of the product candidates; and • timing and receipt of any regulatory approvals.In addition, the probability of success for each drug product candidate will depend on numerous factors, including competition, manufacturing capability andcommercial viability. The successful development of our product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing orcosts of the efforts that will be necessary to complete the remainder of the development of our product candidates for the period, if any, in which material net cashinflows from these potential product candidates may commence. Clinical development timelines, the probability of success and development costs can differmaterially from expectations.General and AdministrativeGeneral and administrative expenses consist primarily of employee-related expenses, including salaries, benefits, non-cash stock-based compensation andtravel expenses, for our employees in executive, finance, business development and support functions. Other general and administrative expenses include facility-related costs not otherwise allocated to research and development expenses and accounting, tax, legal and consulting services. We anticipate that our general andadministrative expenses will increase in the future as we increase our headcount to support our continued research and development and potentialcommercialization of our product candidates. Additionally, if and when we believe a regulatory approval of the first product candidate appears likely, we anticipatean increase in payroll and related expenses as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of our productcandidates.Interest Income (Expense), NetInterest income consists of interest income earned on our cash, cash equivalents and short-term investment balances. Interest expense consists primarily ofinterest expense on amounts borrowed under our term loan facility, capital leases and convertible notes.Change in Fair Value of Common Stock Warrant LiabilityThe change in fair value of the common stock warrant liability was associated with a warrant to purchase common stock issued in connection with a licenseagreement and consisted of the calculated change in value based upon the fair value of the underlying security at the end of each reporting period as calculatedusing the Black-Scholes option pricing model. Gains and losses arising from changes in fair value were recognized in other income (expense) in the consolidatedstatement of operations. As of the closing of our IPO, the anti-dilution provision of the warrant expired; and the warrant liability was reclassified to additional paid-in capital.Recent Accounting PronouncementsFrom time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies andadopted by us as of the specified effective date. Unless otherwise discussed in Note 3 to our audited consolidated financial statements included in this AnnualReport on Form 10-K, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position orresults of operations upon adoption.Critical Accounting Policies and Use of EstimatesOur management’s discussion and analysis of financial condition and results of operations are based on our financial statements, which have been preparedin accordance with accounting principles generally accepted in 82Table of Contentsthe United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets,liabilities and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates andjudgments, including those related to accrued research and development expenses and stock-based compensation. We base our estimates on historical experience,known trends and events and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for makingjudgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates underdifferent assumptions or conditions. In making estimates and judgments, management employs critical accounting policies.While our significant accounting policies are more fully described in Note 3 to our consolidated financial statements included elsewhere in this AnnualReport on Form 10-K, we believe that the following accounting policies are critical to the process of making significant judgments and estimates in the preparationof our consolidated financial statements and understanding and evaluating our reported financial results.Revenue RecognitionWe have generated revenue through license fees for the development and commercialization our product candidate, entinostat. We make judgments thataffect the periods over which we recognize revenue. We recognize revenue when (i) persuasive evidence of an arrangement exists; (ii) transfer of technology hasbeen completed, services have been performed or products have been delivered; (iii) the fee is fixed and determinable; and (iv) collection is reasonably assured. Forrevenue agreements with multiple-elements, we identify the deliverables included within the agreement and evaluate which deliverables represent separate units ofaccounting based on the achievement of certain criteria including whether the deliverable has stand-alone value to the collaborator. Upfront payments received inconnection with licenses of our technology rights are deferred if facts and circumstances dictate that the license does not have stand-alone value and are recognizedas license revenue over the estimated period of performance that is generally consistent with the terms of the research and development obligations contained in thespecific license agreement. We periodically review our estimated periods of performance based on the progress under each arrangement and account for the impactof any changes in estimated periods of performance on a prospective basis.Accrued Research and Development ExpensesAs part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. Thisprocess involves reviewing contracts and vendor agreements, communicating with our applicable personnel to identify services that have been performed on ourbehalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified ofactual cost. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstancesknown to us at that time. Examples of estimated accrued research and development expenses include fees paid to CROs and investigative sites in connection withclinical studies and to vendors related to product manufacturing and development of clinical supplies.We base our expenses related to clinical studies on our estimates of the services received and efforts expended pursuant to contracts with multiple researchinstitutions and CROs that conduct and manage clinical studies on our behalf. The financial terms of these agreements are subject to negotiation, vary from contractto contract and may result in uneven payment flows and expense recognition. Payments under some of these contracts depend on factors out of our control, such asthe successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services willbe performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate,we adjust the accrual accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the statusand 83Table of Contentstiming of services performed differ from the actual status and timing of services performed, we may report amounts that are too high or too low in any particularperiod. To date, we have not experienced any significant adjustments to our estimates.Stock-Based CompensationWe issue stock-based awards to employees and non-employees, generally in the form of stock options. We account for our stock-based awards in accordancewith FASB Accounting Standards Codification, or ASC, Topic 718, Compensation—Stock Compensation , or ASC 718. ASC 718 requires all stock-basedpayments to employees, including grants of employee stock options and modifications to existing stock options, to be recognized in the consolidated statement ofoperations based on their fair values on the date of grant. We account for stock-based awards to non-employees in accordance with FASB ASC Topic 505-50,Equity-Based Payments to Non-Employees , which requires the fair value of the award to be re-measured at fair value as the award vests. We recognize thecompensation cost of service-based awards on a straight-line basis over the vesting period of the award for employees and non-employees, which is generally fouryears.In determining the exercise prices for options granted, the Board has considered the fair value of the common stock as of each grant date. Prior to our IPO,the fair value of the common stock underlying the stock options had been determined by the board of directors at each award grant date based upon a variety offactors, including the results obtained from an independent third-party valuation, the Company’s financial position and historical financial performance, the statusof technological developments within the Company’s products, the composition and ability of the current clinical and management team, an evaluation orbenchmark of the Company’s competition, the current business climate in the marketplace, the illiquid nature of the common stock, arm’s-length sales of theCompany’s capital stock (including convertible preferred stock), the effect of the rights and preferences of the preferred stockholders, and the prospects of aliquidity event, among others. Following the completion of the IPO, stock option values are determined based on the market price of our common stock on theNASDAQ Global Select Market.The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires the input of highlysubjective assumptions, including the fair value of the underlying common stock, the expected volatility of the price of our common stock, the expected term of theoption, and the risk-free interest rate. Prior to our IPO, we were a privately-held company and lacked company-specific historical and implied volatilityinformation. Therefore, we estimated our expected volatility based on the historical volatility of our publicly traded peer companies. We expect to continue to do sountil such time as we have adequate historical data regarding the volatility of our traded stock price following our IPO. We estimate the expected term of theoptions using the “simplified method,” whereby the expected life equals the average of the vesting term and the original contractual term of the option. The risk-free interest rate is determined by reference to U.S. Treasury bond yields at or near the time of grant for time periods similar to the expected term of the award.We are also required to estimate forfeitures at the time of grant and revise estimates in subsequent periods if actual forfeitures differ from estimates. We usehistorical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest. To the extentthat actual forfeitures differ from our estimates, the difference is recorded as a cumulative adjustment in the period the estimates were revised. Stock-basedcompensation expense recognized in the consolidated financial statements is based on awards that are ultimately expected to vest.See Note 14 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information on our stock-basedcompensation.Derivative InstrumentsWe have recorded common stock warrants issued in connection with license agreements as derivative financial liabilities. These warrants were initiallyrecorded at fair value with gains and losses arising from 84Table of Contentschanges in fair value recognized in the consolidated statement of operations at each period end while such instruments are outstanding. The liabilities were valuedusing a Black-Scholes option-pricing model. The significant assumptions used in estimating the fair value of our warrant liabilities include the exercise price,volatility of the stock underlying the warrant, risk-free interest rate, estimated fair value of the stock underlying the warrant, and the estimated life of the warrant.In 2014, we recorded a derivative liability related to the 2014 term loans for the contingent success fee owed upon the occurrence of an IPO or other changeof control events. The estimated fair value was determined using a PWERM approach. The fair value of the derivative was re-measured at each balance sheet dateuntil the liability was settled and any changes in the fair value of the derivative liability were recorded in other income (expense) in the consolidated statement ofoperations. The term loans were paid in full in October 2015; however, the liability for the success fee survived the repayment of the term loans. Upon completionof the IPO, the success fee is no longer considered a derivative liability. The success fee of $0.2 million is payable by June 2018 and included in other long-termliabilities.Results of OperationsComparison of the years ended December 31, 2016 and 2015: Years Ended December 31, Increase (Decrease) (in thousands) 2016 2015 $ % Revenues: License fees $1,220 $627 $593 95% Total revenues 1,220 627 593 95% Operating expenses: Research and development 31,665 9,549 22,116 232% General and administrative 13,321 11,591 1,730 15% Total operating expenses 44,986 21,140 23,846 113% Loss from operations (43,766) (20,513) (23,253) 113% Other (expense) income: Interest income (expense), net 956 (1,414) 2,370 (168)% Change in fair value of common stock warrant liability (1,703) (2,155) 452 (21)% Other income (expense), net 41 (37) 78 (211)% Total other (expense) income (706) (3,606) 2,900 (80)% Net loss $(44,472) $(24,119) $(20,353) 84% License FeesFor the year ended December 31, 2016, license fees increased $0.6 million, or 95%, to $1.2 million compared to $0.6 million in the prior year. In 2015,arrangement consideration of $17.3 million related to the KHK license agreement was allocated to the license unit of accounting and is being recognized as revenueratably over our expected service period (currently expected to be through 2029), commencing on the date of the first delivery of the clinical trial materials, whichoccurred in June 2015.Research and DevelopmentFor the year ended December 31, 2016, our total research and development expenses increased $22.1 million, or 232%, to $31.7 million from $9.5 millionfor the prior year. These increases were primarily due 85Table of Contentsto increased patient accrual costs in E2112, higher expenses associated with the Phase 2 expansion of ENCORE 601, and the commencement of ENCORE 602 aswell which represented an overall all increase in clinical and research activities of $13.5 million as well as the $5 million upfront payment related to expanding thepipeline with SNDX-6352. In addition, there were also increases in employee compensation costs of $2.4 million, legal and consulting activities of $0.6 million,facilities costs of $0.4 million and travel costs of 0.1 million. The increase in employee compensation costs was primarily due to on-boarding expenses of $2.2million related to 14 additional employees, restructuring costs of $0.1 million, and non-cash stock-based compensation expense of $0.1 million.Research and development expenses consisted of the following: Years Ended December 31, Increase (Decrease) (in thousands) 2016 2015 $ % External research and development expenses $25,236 $5,957 $19,279 324% Internal research and development expenses 6,429 3,592 2,837 79% Total research and development expenses $31,665 $9,549 $22,116 232% General and AdministrativeFor the year ended December 31, 2016, our total general and administrative expenses increased $1.7 million, or 15%, to $13.3 million, from $11.6 millionfor the prior year. The increase in general and administrative expenses was primarily due to increases in employee compensation of $1.3 million, directors andofficers insurance and other costs related to being a public company of $1.0 million, and facilities costs of $0.2 million. These increases were partially offset bydecreases in legal and consulting expenses of $0.8 million primarily due to lower patent legal costs and lower spending related to market research during 2016compared to 2015. The increase in employee compensation of $1.3 million was due to increased salary expense of $1.1 million due to increased headcount andnon-cash charges related to stock-based compensation of $0.8 million. These increases were partially offset by a decrease in restructuring costs of $0.6 million.Interest Income (Expense), NetFor the year ended December 31, 2016, interest income (expense), net, increased $2.4 million from the prior year. The increase was primarily due to interestearned on our cash, cash equivalents and short-term investments of $0.9 million in 2016 compared to $0.5 million in 2015, which increased as a result of the $50.5million of net proceeds from our IPO in March 2016 and $79.6 million of net proceeds from our Series C-1 preferred stock financing during the second and thirdquarters of 2015. In addition, for 2015, interest income (expense), net, included interest expense on the $9.0 million of term loans that were funded in December2014. The term loans were paid in full in October 2015, and there was no interest-bearing debt outstanding as of December 31, 2016 and December 31, 2015.Change in Fair Value of Common Stock Warrant LiabilityThe decrease in expense of $0.5 million in the change in fair value of common stock warrant liability for the year ended December 31, 2016, compared to theprior year was due to the expiration of the anti-dilution provision contained in the Bayer warrant as a result of the closing of our IPO during the first quarter of2016, upon which the warrant liability was reclassified to additional paid-in capital. 86Table of ContentsComparison of the years ended December 31, 2015 and 2014: Years Ended December 31, Increase (Decrease) (in thousands) 2015 2014 $ % Revenues: License fees $627 $— $627 100% Total revenues 627 — 627 100% Operating expenses: Research and development 9,549 10,175 (626) (6)% General and administrative 11,591 11,157 434 4% Total operating expenses 21,140 21,332 (192) (1)% Loss from operations (20,513) (21,332) (819) (4)% Other (expense) income: Interest (expense) income, net (1,414) (289) 1,125 NM Change in fair value of common stock warrant liability (2,155) 1,789 3,944 NM Other (expense) income, net (37) 4 41 NM Total other (expense) income (3,606) 1,504 5,110 NM Net loss $(24,119) $(19,828) $4,291 22% License FeesFor the year ended December 31, 2015, we recognized license fees of $0.6 million derived from the KHK license agreement. The arrangement considerationof $17.3 million was allocated to the license unit of accounting and will be recognized as revenue ratably over our expected service period (currently expected to bethrough 2029), commencing on the date of the first delivery of the clinical trial materials. In June 2015, we began delivering clinical supplies to KHK andcommenced recognizing revenue.Research and DevelopmentFor the year ended December 31, 2015, our total research and development expenses decreased $0.6 million, or 6%, to $9.5 million from $10.2 million forthe prior year. Research and development for the year ended December 31, 2014, included the achievement of a $2.0 million development milestone under thelicense agreement with Bayer Pharma AG (formerly known as Bayer Schering Pharma AG), or Bayer, and the expenses related to the suspension of the planned305 clinical trial in the third quarter of 2014. In addition, for the year ended December 31, 2015, spending related to the Phase 3 clinical trial of entinostat increased$0.8 million, expenses related to producing entinostat and placebo for clinical trials increased by $0.5 million, spending related to the ENCORE 601 trial increased$0.8 million and employee compensation costs increased $0.5 million. The increase in employee compensation costs was primarily due to non-cash charges relatedto stock-based compensation. 87Table of ContentsResearch and development expenses consisted of the following: Years Ended December 31, Increase (Decrease) (in thousands) 2015 2014 $ % External research and development expenses $5,957 $7,241 $(1,284) (18)% Internal research and development expenses 3,592 2,934 658 22% Total research and development expenses $9,549 $10,175 $(626) (6)% General and AdministrativeFor the year ended December 31, 2015, our total general and administrative expenses increased $0.4 million, or 4%, to $11.6 million, from $11.2 million forthe prior year. The increase in general and administrative expenses was primarily due to the increases in compensation costs of $3.0 million and legal andconsulting costs of $1.5 million for the year ended December 31, 2015, which was partially offset by the write-off of previously capitalized costs of $4.3 millionincurred in connection with preparing for an IPO in September 2014. The increase in compensation costs was due to costs related to an increase in headcount aswell as employee termination costs of $1.3 million, including $0.7 million of non-cash charges related to stock-based compensation. The increase in legal andconsulting costs was primarily related to business development activities and intellectual property and trademark filings.Interest (Expense) Income, NetFor the year ended December 31, 2015, interest expense, net, increased $1.1 million from the prior year. The increase was primarily due to interest expenseon the $9.0 million of term loans that were funded in September and December 2014.Change in Fair Value of Common Stock Warrant LiabilityThe increase in expense of $3.9 million in the change in fair value of common stock warrant liability for the year ended December 31, 2015 compared to theprior year was due to an increase in the fair value of the Bayer common stock warrant liability. At each period end, the fair value of the outstanding common stockwarrant liability is re-measured, and the change in the fair value is recorded in other income (expense) in the consolidated statement of operations. Upon thecompletion of our IPO, the warrant was reclassified to additional paid-in capital.Liquidity and Capital ResourcesIn March 2016, we completed our IPO whereby we sold 4,809,475 shares of our common stock at the price of $12.00 per share, resulting in total netproceeds of $50.5 million, after deducting underwriting discounts and commissions and offering expenses. Since our inception and through December 31, 2016, ouroperations have been financed primarily by net proceeds from the sale of convertible preferred stock and convertible debt securities and proceeds from our licenseagreements. As of December 31, 2016, our cash, cash equivalents and short-term investments were $105.3 million. We believe that our existing cash, cashequivalents and short-term investments will be sufficient to fund our projected operating expenses and capital expenditure requirements for at least the next 12months.Future Funding RequirementsOur primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and developmentservices, clinical costs, legal and other regulatory expenses and general overhead costs. We have based our estimates on assumptions that may prove to beincorrect, and we could use our capital resources sooner than we currently expect. 88Table of ContentsAdditionally, the process of testing drug candidates in clinical trials is costly, and the timing of progress in these trials is uncertain. We cannot estimate theactual amounts necessary to successfully complete the development and commercialization of our product candidates or whether, or when, we may achieveprofitability. Our future capital requirements will depend on many factors, including: • the initiation, progress, timing, costs and results of clinical trials of our product candidates; • the outcome, timing and cost of seeking and obtaining regulatory approvals from the FDA and comparable foreign regulatory authorities, including thepotential for such authorities to require that we perform more trials than we currently expect; • the cost to establish, maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments wemay be required to make, or that we may receive, in connection with licensing, preparing, filing, prosecuting, defending and enforcing any patents orother intellectual property rights; • market acceptance of our product candidates; • the cost and timing of selecting, auditing and developing manufacturing capabilities, and potentially validating manufacturing sites for commercial-scale manufacturing; • the cost and timing for obtaining pricing and reimbursement, which may require additional trials to address pharmacoeconomic benefit; • the cost of establishing sales, marketing and distribution capabilities for our product candidates if either candidate receives regulatory approval and wedetermine to commercialize it ourselves; • the costs of acquiring, licensing or investing in additional businesses, products, product candidates and technologies; • the effect of competing technological and market developments; and • our need to implement additional internal systems and infrastructure, including financial and reporting systems, as we grow our company.We have no products approved for commercial sale and have not generated any product revenues from product sales to date. Until such time, if ever, as wecan generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings and additional fundingfrom license and collaboration arrangements. Except for any obligations of our collaborators to reimburse us for research and development expenses or to makemilestone or royalty payments under our agreements with them, we will not have any committed external source of liquidity.We have incurred losses and cumulative negative cash flows from operations since our inception. As of December 31, 2016, we had an accumulated deficitof $305.3 million. We anticipate that we will continue to incur significant losses for at least the next several years. We expect that our research and developmentand general and administrative expenses will continue to increase. As a result, we will need additional capital to fund our operations, which we may raise through acombination of the sale of equity, debt financings, or other sources, including potential collaborations. To the extent that we raise additional capital through thefuture sale of equity or debt, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or otherpreferences that adversely affect the rights of our existing common stockholders. If we raise additional funds through collaboration arrangements in the future, wemay have to relinquish valuable rights to our technologies, future revenue streams or drug candidates or grant licenses on terms that may not be favorable to us. Ifwe are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our productdevelopment or future commercialization efforts or grant rights to develop and market drug candidates that we would otherwise prefer to develop and marketourselves. 89Table of ContentsCash FlowsThe following is a summary of cash flows: Years Ended December 31, (in thousands) 2016 2015 2014 Net cash used in operating activities $(35,157) $(2,428) $(14,393) Net cash (used in) provided by investing activities (18,380) (61,669) 1,888 Net cash provided by financing activities 54,202 77,267 12,410 Net increase (decrease) in cash and cash equivalents $665 $13,170 $(95) Net Cash Used in Operating ActivitiesNet cash used in operating activities for the year ended December 31, 2016 was $35.2 million and primarily consisted of our net loss of $38.1 millionadjusted for non-cash items including stock-based compensation of $4.7 million and the change in fair value of warrants of $1.7 million and a net increase inoperating assets and liabilities of $2.9 million. The significant items in the increase in operating assets and liabilities include an increase in prepaid expenses andother assets of $1.6 million and a decrease in deferred revenue of $1.2 million partially offset by increases in accounts payable of $0.9 million and accruedexpenses and other liabilities of $4.8 million.Net cash used in operating activities for the year ended December 31, 2015 was $2.4 million and primarily consisted of our net loss of $17.0 million adjustedfor non-cash items including stock-based compensation of $3.9 million, the change in fair value of warrants of $2.1 million, amortization of debt discount and debtissuance costs of $0.8 million, and amortization and accretion of investments of $0.3 million and a net increase in operating assets and liabilities of $14.6 million.The significant items in the increase in operating assets and liabilities include increases in deferred revenue of $16.7 million and accounts payable of $1.0 millionpartially offset by an increase in prepaid expenses and other assets of $1.2 million and a decrease in accrued expenses and other liabilities of $1.9 million. Theincrease in deferred revenue of $16.7 million was due to the proceeds we received during the first quarter of 2015 from the KHK license agreement related to theupfront license fee of $17.3 million, net of license fee revenue recognized during the year ended December 31, 2015.Net cash used in operating activities for the year ended December 31, 2014 was $14.4 million and primarily consisted of our net loss for the year endedDecember 31, 2014 of $14.9 million adjusted for non-cash items including stock-based compensation of $2.3 million, and the write-off of deferred costs associatedwith our postponed IPO, partially offset by the change in fair of warrants of $1.8 million and a net increase in operating assets and liabilities of $0.6 million. Thesignificant items in the increase in operating assets and liabilities include an increase an increase in accrued expenses and other liabilities of $1.2 million, partiallyoffset by a decrease in accounts payable of $0.7 million.Net Cash (Used in) Provided by Investing ActivitiesNet cash used in investing activities for the year ended December 31, 2016 was $18.4 million and was primarily due to the purchase of $158.3 million ofavailable-for-sale marketable securities partially offset by $140.3 million in proceeds from the maturities of available-for-sale marketable securities, purchases ofproperty and equipment of $0.3 million and an increase in restricted cash of $0.1 million.Net cash used in investing activities for the year ended December 31, 2015 was $61.7 million and was primarily due to the purchase of $102.0 million ofavailable-for-sale marketable securities partially offset by $40.5 million in proceeds from the maturities of available-for-sale marketable securities and an increasein restricted cash of $0.1 million. 90Table of ContentsNet cash provided by investing activities for the year ended December 31, 2014 was $1.9 million and was primarily due to the $5.3 million in proceeds fromthe maturities of available-for-sale marketable securities partially offset by the purchase of $3.4 million of available-for-sale marketable securities.Net Cash Provided by Financing ActivitiesNet cash provided by financing activities for the year ended December 31, 2016 was $54.2 million and was primarily due to the $52.1 million of proceedsfrom our IPO, net of underwriting discounts and commissions of $4.0 million and other direct costs of $1.5 million, and $2.1 million of proceeds from stock optionexercises.Net cash provided by financing activities for the year ended December 31, 2015 was $77.3 million and was primarily due to the proceeds from the KHKlicense agreement and stock purchase agreement with KHK, of which $7.7 million related to the issuance of Series B-1 convertible preferred stock, and proceedsfrom the Series C-1 financings of $79.6 million, net of $0.4 million of issuance costs, partially offset by the $9.0 million early repayment of the term loans duringthe fourth quarter of 2015.Net cash provided by financing activities for the year ended December 31, 2014 was $12.4 million and was primarily due to the $9.0 million proceeds fromthe term loans and $5.0 million from the issuance of convertible debt in the form of convertible notes, partially offset by $1.6 million of deferred issuance costsrelated to preparing for an IPO in 2014 and debt issuances.Contractual Obligations and CommitmentsThe following table summarizes our significant contractual obligations as of December 31, 2016: (in thousands) Total Less than1 Year 1 to 3 Years 3 to 5Years More than5 Years Operating leases for office space (1) $2,518 $393 $1,087 $979 $59 Operating lease for office equipment (2) 13 3 6 4 — Capital lease for office equipment (3) 7 4 3 — — $2,538 $400 $1,096 $983 $59 (1) In December 2013, we entered into a 40-month non-cancelable operating lease for office space in Waltham, Massachusetts, that expires on April 10, 2017. InSeptember 2016, we entered into a new five-year operating lease for office space in Waltham, Massachusetts, with a lease commencement date of March 1,2017. We have the right to terminate the Waltham lease after three years as long as proper notice is given and a termination fee of $55,000 is paid on thelease termination date. The landlord also has the right to terminate the Waltham least after three years as long as proper notice is given. In December 2015,we entered into a new 62-month building lease for office space in New York, New York, which commenced on January 1, 2016. We have the right toterminate the New York lease after 38 months as long as proper notice is given and a termination fee equal to three months’ rent is paid on the leasetermination date. The minimum lease payments above do not include any related common area maintenance charges or real estate taxes. (2) In February 2016, we entered into a five-year non-cancelable operating lease for office equipment. (3) In December 2013, we entered into a five-year non-cancelable lease for office equipment, which is accounted for as a capital lease. The leased asset isincluded in property, plant and equipment, at cost.The contractual obligations table does not include any potential contingent payments upon the achievement by us of clinical, regulatory and commercialevents, as applicable, or royalty payments we may be required to make under license or collaboration agreements we have entered into with various entitiespursuant to which we have in-licensed certain intellectual property. See “Business—Collaborations,” “Business—License Agreements” and “Business—In-Licensed Intellectual Property” for additional information. The table also excludes potential 91Table of Contentspayments we may be required to make under manufacturing agreements as the timing of when these payments will actually be made is uncertain and the paymentsare contingent upon the initiation and completion of future activities.Net Operating Loss and Research and Development Tax Credit CarryforwardsAt December 31, 2016, we had federal and state tax net operating loss carryforwards of $36.0 million and $27.5 million, respectively. The federal and statenet operating loss carryforwards expire at various dates through 2036. At December 31, 2016, we had available income tax credits of $2.0 million, which areavailable to reduce future income taxes, if any. These income tax credits begin to expire in 2021.Utilization of the net operating losses and credits may be subject to a substantial annual limitation due to ownership change limitations provided by theInternal Revenue Code of 1986, as amended. The annual limitation may result in the expiration of our net operating losses and credits before we can use them. Wehave recorded a valuation allowance on all of our deferred tax assets, including our deferred tax assets related to our net operating loss and research anddevelopment tax credit carryforwards.Off-Balance Sheet ArrangementsWe did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations ofthe SEC.Emerging Growth Company StatusWe are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerginggrowth company for up to five years. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certaindisclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include: • reduced disclosure about our executive compensation arrangements; • no non-binding stockholder advisory votes on executive compensation or golden parachute arrangements; and • exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.We have taken advantage of reduced reporting burdens in this Annual Report on Form 10-K. In particular, in this Annual Report on Form 10-K, we have notincluded all of the executive compensation related information that would be required if we were not an emerging growth company. We may take advantage ofthese exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth companyif we have more than $1.0 billion in annual revenues as of the end of any fiscal year, if we are deemed to be a large accelerated filer under the rules of the Securitiesand Exchange Commission, or SEC, or if we issue more than $1.0 billion of non- convertible debt over a three-year period. Section 107 of the JOBS Act providesthat an emerging growth company can take advantage of the extended transition period for complying with new or revised accounting standards. Thus, an emerginggrowth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocablyelected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on whichadoption of such standards is required for other public companies. 92Table of ContentsItem 7A. Quantitative and Qualitative Disclosures about Market RiskThe market risk inherent in our financial instruments and in our financial position represents the potential loss arising from adverse changes in interest rates.As of December 31, 2016, we had cash equivalents of $23.8 million, consisting of overnight investments, interest-bearing money market funds and highly ratedcorporate bonds, and short-term investments of $81.5 million, consisting of commercial paper and highly rated corporate bonds. Our primary exposure to marketrisk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. The primary objectives of our investment activities are toensure liquidity and to preserve principal while at the same time maximizing the income we receive from our marketable securities without significantly increasingrisk. We have established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity. Due to theshort-term maturities of our cash equivalents and the low risk profile of our short-term investments, an immediate 100 basis point change in interest rates would nothave a material effect on the fair market value of our cash equivalents and short-term investments. We do not believe that inflation and changing prices had asignificant impact on our results of operations for any periods presented herein.Item 8. Financial Statements and Supplementary DataOur consolidated financial statements, together with the report of our independent registered public accounting firm, appear in this Annual Report on Form10-K beginning on page F-1.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.Item 9A. Controls and ProceduresManagement’s Evaluation of our Disclosure Controls and ProceduresOur management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of the end of the period coveredby this Annual Report on Form 10-K, the effectiveness of our disclosure controls and procedures. Based on that evaluation of our disclosure controls andprocedures as of December 31, 2016, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of suchdate are effective at the reasonable assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the ExchangeAct, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it filesor submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosurecontrols and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we fileor submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer,as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed andoperated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefitrelationship of possible controls and procedures.Management’s Annual Report on Internal Control Over Financial ReportingThis Annual Report on Form 10-K does not include a report of management’s assessment regarding our internal control over financial reporting (as definedin Rule 13a-15(f) under the Exchange Act) or an attestation report of our independent registered accounting firm due to a transition period established by rules ofthe Securities and Exchange Commission for newly public companies. Additionally, our auditors will not be required to formally opine on the effectiveness of ourinternal control over financial reporting pursuant to Section 404 until we are no longer an “emerging growth company” as defined in the JOBS Act as we havetaken advantage of the exemptions available to us through the JOBS Act. 93Table of ContentsChanges in Internal Control Over Financial ReportingThere was no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or isreasonably likely to materially affect, our internal control over financial reporting.Item 9B. Other InformationNone. 94Table of ContentsPART IIIItem 10. Directors, Executive Officers, and Corporate GovernanceThe information required by this item is incorporated by reference to the information set forth in the sections titled “Executive Officers” and “The Board ofDirectors and Its Committees” in our 2017 Proxy Statement.Item 11. Executive CompensationThe information required by this item is incorporated by reference to the information set forth in the section titled “Executive Officer and DirectorCompensation” in our 2017 Proxy Statement.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this item is incorporated by reference to the information set forth in the section titled “Security Ownership of Certain BeneficialOwners and Management and Related Stockholder Matters” in our 2017 Proxy Statement.Item 13. Certain Relationships and Related Transactions and Director IndependenceThe information required by this item is incorporated by reference to the information set forth in the section titled “Certain Relationships and Related PartyTransactions” in our 2017 Proxy Statement.Item 14. Principal Accountant Fees and ServicesThe information required by this item is incorporated by reference to the information set forth in the section titled “Independent Registered PublicAccounting Firm Fees” in our 2017 Proxy Statement.PART IVItem 15. Exhibits, Financial Statements and Schedules(a)(1) Financial Statements.The response to this portion of Item 15 is set forth under Item 8 hereof.(a)(2) Financial Statement Schedules.All schedules have been omitted because they are not required or because the required information is given in the Consolidated Financial Statements orNotes thereto.(a)(3) Exhibits.The exhibits required to be filed as part of this Annual Report on Form 10-K are listed in the Exhibit Index attached hereto and are filed or incorporatedherein by reference.Item 16. Form 10-K SummaryNot applicable. 95Table of ContentsSIGNATURESPursuant to the requirements of Section 13 of 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. SYNDAX PHARMACEUTICALS, INC.Date: March 14, 2017 By: /s/ Briggs W. Morrison, M.D. Briggs W. Morrison, M.D. Chief Executive OfficerPOWER OF ATTORNEYEach person whose individual signature appears below hereby authorizes and appoints Briggs W. Morrison, M.D. and Luke J. Albrecht, and each of them,with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or hername, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendmentsto this report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and ExchangeCommission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifyingand confirming all that said attorneys-in-fact and agents or any of them or their or his or her substitute or substitutes may lawfully do or cause to be done by virtuethereof.Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities and on the dates indicated. Signature Title Date/s/ Briggs W. Morrison, M.D.Briggs W. Morrison, M.D. Chief Executive Officer and Director(Principal Executive Officer) March 14, 2017/s/ Richard P. SheaRichard P. Shea Chief Financial Officer and Treasurer(Principal Financial Officer andPrincipal Accounting Officer) March 14, 2017/s/ Dennis G. PodlesakDennis G. Podlesak Chairman of the Board of Directors March 14, 2017/s/ Kim Kamdar, Ph.D.Kim Kamdar, Ph.D. Director March 14, 2017/s/ Ivor Royston, M.D.Ivor Royston, M.D. Director March 14, 2017/s/ Pierre LegaultPierre Legault Director March 14, 2017/s/ Henry ChenHenry Chen Director March 14, 2017 96Table of ContentsSignature Title Date/s/ Luke Evnin, Ph.D.Luke Evnin, Ph.D. Director March 14, 2017/s/ Fabrice Egros, PharmD, Ph.D.Fabrice Egros, PharmD, Ph.D. Director March 14, 2017/s/ George W. Sledge, Jr., M.D.George W. Sledge, Jr., M.D. Director March 14, 2017 97Table of ContentsSyndax Pharmaceuticals, Inc.Index to Consolidated Financial Statements Pages Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2016 and 2015 F-3 Consolidated Statements of Operations for the Years Ended December 31, 2016, 2015 and 2014 F-4 Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2016, 2015 and 2014 F-5 Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Years Ended December 31, 2016, 2015 and 2014 F-6 Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2015 and 2014 F-7 Notes to Consolidated Financial Statements F-8 F-1Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors and Stockholders ofSyndax Pharmaceuticals, Inc.Waltham, MassachusettsWe have audited the accompanying consolidated balance sheets of Syndax Pharmaceuticals, Inc. and subsidiaries (the “Company”) as of December 31, 2016 and2015, and the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows foreach of the three years in the period ended December 31, 2016. These financial statements are the responsibility of the Company’s management. Our responsibilityis to express an opinion on these financial statements based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required tohave, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financialreporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe Company’s internal control over financial reporting. Accordingly, we express no such opinion . An audit also includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as wellas evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Syndax Pharmaceuticals, Inc. and subsidiariesas of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016, inconformity with accounting principles generally accepted in the United States of America./s/ Deloitte & Touche LLPBoston, MassachusettsMarch 14, 2017 F-2Table of ContentsSYNDAX PHARMACEUTICALS, INC.CONSOLIDATED BALANCE SHEETS(In thousands, except share and per share data) December 31, 2016 2015 ASSETS Current assets: Cash and cash equivalents $23,844 $23,179 Restricted cash 151 54 Short-term investments 81,486 63,310 Prepaid expenses and other current assets 3,029 1,464 Total current assets 108,510 88,007 Property and equipment, net 260 88 Other assets 243 1,808 Total assets $109,013 $89,903 LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable $2,375 $1,452 Accrued expenses and other current liabilities 6,771 2,175 Current portion of deferred revenue 1,220 1,220 Total current liabilities 10,366 4,847 Long-term liabilities: Common stock warrant liability — 2,848 Deferred revenue, less current portion 14,220 15,440 Other long-term liabilities 288 70 Total long-term liabilities 14,508 18,358 Total liabilities 24,874 23,205 Commitments (Note 16) Convertible preferred stock (Note 12) — 319,113 Stockholders’ equity (deficit): Series A convertible preferred stock, $0.001 par value, 0 and 3,512,194 shares authorized; 0 and 700,435 shares issued andoutstanding at December 31, 2016 and December 31, 2015, respectively — 7,231 Preferred stock, $0.001 par value, 10,000,000 and 0 shares authorized; 0 shares outstanding at December 31, 2016 andDecember 31, 2015, respectively — — Common stock, $0.0001 par value, 100,000,000 and 20,800,000 shares authorized; 18,215,181 and 85,440 sharesoutstanding at December 31, 2016 and December 31, 2015, respectively 2 1 Additional paid-in capital 389,374 — Accumulated other comprehensive income 56 28 Accumulated deficit (305,293) (259,675) Total stockholders’ equity (deficit) 84,139 (252,415) Total liabilities, convertible preferred stock and stockholders’ equity (deficit) $109,013 $89,903 The accompanying notes are an integral part of these consolidated financial statements. F-3Table of ContentsSYNDAX PHARMACEUTICALS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except share and per share data) Years Ended December 31, 2016 2015 2014 Revenues: License fees $1,220 $627 $— Total revenues 1,220 627 — Operating expenses: Research and development 31,665 9,549 10,175 General and administrative 13,321 11,591 11,157 Total operating expenses 44,986 21,140 21,332 Loss from operations (43,766) (20,513) (21,332) Other (expense) income: Interest income (expense), net 956 (1,414) (289) Change in fair value of common stock warrant liability (1,703) (2,155) 1,789 Other income (expense), net 41 (37) 4 Total other (expense) income (706) (3,606) 1,504 Net loss $(44,472) $(24,119) $(19,828) Net loss attributable to common stockholders $(47,070) $(103,845) $(26,357) Net loss per share attributable to common stockholders—basic and diluted $(3.22) $(1,519.27) $(453.02) Weighted-average common shares outstanding—basic and diluted 14,619,716 68,352 58,181 The accompanying notes are an integral part of these consolidated financial statements. F-4Table of ContentsSYNDAX PHARMACEUTICALS, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(In thousands) Years Ended December 31, 2016 2015 2014 Net loss $(44,472) $(24,119) $(19,828) Other comprehensive loss: Unrealized gains on marketable securities, net of tax 28 28 — Comprehensive loss $(44,444) $(24,091) $(19,828) The accompanying notes are an integral part of these consolidated financial statements. F-5Table of ContentsSYNDAX PHARMACEUTICALS, INC.CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK ANDSTOCKHOLDERS’ EQUITY (DEFICIT)(In thousands, except share and per share data) Convertible Preferred Stock $0.001 Par Value Series A Convertible Preferred Stock $0.001 Par Value Common Stock $0.0001 Par Value Additional Paid-In Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders’ Equity (Deficit) Shares Amount Shares Amount Shares Amount BALANCE—January 1, 2014 6,105,956 $140,324 700,435 $7,231 56,573 $1 $— $— $(135,707) $(128,475) Exercise of stock options — — — — 1,944 — 6 — — 6 Accretion for convertible preferred stockdividends — 6,529 — — — — (2,263) — (4,266) (6,529) Stock-based compensation expense — — — — — — 2,257 — — 2,257 Net loss and comprehensive loss — — — — — — — — (19,828) (19,828) BALANCE—December 31, 2014 6,105,956 146,853 700,435 7,231 58,517 1 — — (159,801) (152,569) Issuance of Series B-1 convertible preferredstock in January 2015 in conjunction withKHK Agreement 536,049 7,713 — — — — — — — — Issuance of Series C-1 convertible preferredstock in June 2015, net of issuance costs of$0.2 million 1,340,113 18,526 — — — — — — — — Conversion of 2014 Notes into Series C-1 372,446 5,211 — — — — — — — — Issuance of Series C-1 convertible preferredstock in August 2015, net of issuance costs of$0.2 million 4,377,902 61,084 — — — — — — — — Accretion of convertible preferred stock toredemption value — 69,715 — — — — (123) — (69,592) (69,715) Accretion for convertible preferred stockdividends — 10,011 — — — — (3,848) — (6,163) (10,011) Exercise of stock options — — — — 24,876 — 75 — — 75 Vesting of restricted stock — — — — 2,047 — 14 — — 14 Stock-based compensation expense — — — — — — 3,882 — — 3,882 Unrealized gain on short-term investments — — — — — — — 28 — 28 Net loss — — — — — — — — (24,119) (24,119) BALANCE—December 31, 2015 12,732,466 319,113 700,435 7,231 85,440 1 — 28 (259,675) (252,415) Accretion for convertible preferred stockdividends — 2,598 — — — — (1,452) — (1,146) (2,598) Proceeds from initial public offering, net ofoffering costs of $7,186 — — — — 4,809,475 — 50,527 — — 50,527 Coversion of preferred stock into commonstock (12,732,466) (321,711) (700,435) (7,231) 12,872,551 1 328,941 — — 321,711 Reclassification of common stock warrantliability — — — — — — 4,551 — — 4,551 Exercise of stock options — — — — 441,573 — 2,058 — — 2,058 Vesting of restricted stock — — — — 6,142 — 42 — — 42 Stock-based compensation expense — — — — — — 4,708 — — 4,708 Unrealized gain on short-term investments — — — — — — — 28 — 28 Repurchase of fractional shares resulting fromreverse stock splits — — — — — — (1) — — (1) Net loss — — — — — — — — (44,472) (44,472) Balance—December 31, 2016 — $— — $— 18,215,181 $2 $389,374 $56 $(305,293) $84,139 The accompanying notes are an integral part of these consolidated financial statements. F-6Table of ContentsSYNDAX PHARMACEUTICALS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Years Ended December 31, 2016 2015 2014 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(44,472) $(24,119) $(19,828) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 89 21 15 Amortization of debt discount and debt issuance costs — 762 40 Amortization and accretion of investments (126) 303 46 Stock-based compensation 4,708 3,882 2,257 Change in fair value of warrants 1,703 2,155 (1,789) Write-off of deferred costs associated with postponed initial public offering — — 4,319 Other 25 8 (4) Changes in operating assets and liabilities: Prepaid expenses and other assets (1,629) (1,205) 64 Accounts payable 923 1,045 (726) Deferred revenue (1,220) 16,660 — Accrued expenses and other liabilities 4,842 (1,940) 1,213 Net cash used in operating activities (35,157) (2,428) (14,393) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (261) (49) (4) Change in restricted cash (97) (118) (1) Purchases of short-term investments (158,319) (102,008) (3,393) Proceeds from sales and maturities of short-term investments 140,297 40,506 5,286 Net cash (used in) provided by investing activities (18,380) (61,669) 1,888 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock in initial public stock offering, net 52,148 — — Proceeds from issuance of convertible preferred stock, net — 87,323 — Proceeds from issuance of debt — — 14,000 Proceeds from exercise of stock options 2,058 191 6 Deferred issuance costs — (1,245) (1,594) Payments on term loans — (9,000) — Other (4) (2) (2) Net cash provided by financing activities 54,202 77,267 12,410 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 665 13,170 (95) CASH AND CASH EQUIVALENTS—beginning of year 23,179 10,009 10,104 CASH AND CASH EQUIVALENTS—end of year $23,844 $23,179 $10,009 Supplemental disclosures of cash flow information (Note 17). F-7Table of ContentsSYNDAX PHARMACEUTICALS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Nature of BusinessSyndax Pharmaceuticals, Inc. (the Company) is a clinical stage biopharmaceutical company developing an innovative pipeline of combination therapies inmultiple cancer indications. The Company’s lead product candidate, entinostat, is currently being evaluated in a Phase 3 clinical trial for advanced hormonereceptor positive, human epidermal growth factor receptor 2 negative breast cancer. Entinostat was granted Breakthrough Therapy designation by the U.S. Foodand Drug Administration following positive results from the Company’s Phase 2b clinical trial, ENCORE 301. The Company is developing entinostat, which hasdirect effects on both cancer cells and immune regulatory cells, and SNDX-6352, a monoclonal antibody that targets the colony stimulating factor-1 receptor toenhance the body’s immune response on tumors that have shown sensitivity to immunotherapy. The Company is evaluating entinostat as a combination therapeuticin Phase 1b/2 clinical trials with Merck & Co., Inc. for non-small cell lung cancer and melanoma; with Genentech, Inc. for triple negative breast cancer; and withMerck KGaA, Darmstadt, Germany, and Pfizer Inc. for ovarian cancer. We acquired the exclusive rights to SNDX-6352 in July 2016 and are evaluating SNDX-6352 in a single ascending dose Phase 1 clinical trial. The Company plans to continue to leverage the technical and business expertise of our management team andscientific collaborators to license, acquire and develop additional cancer therapies to expand our pipeline.In March 2016, the Company completed its initial public offering (“IPO”) whereby it sold 4,809,475 shares of common stock at the initial public offeringprice of $12.00 per share, which included 409,475 shares issued pursuant to the underwriters’ partial exercise of their over-allotment option to purchase additionalshares of common stock. The aggregate net proceeds received by the Company from the offering were $50.5 million, net of underwriting discounts andcommissions of $4.0 million and offering expenses of $3.1 million. Upon the closing of the IPO, all outstanding shares of the Company’s outstanding convertiblepreferred stock converted into 12,872,551 shares of common stock; and the Company’s outstanding warrant liability to purchase 357,840 shares of the Company’scommon stock valued at $4.6 million was reclassified to additional paid-in capital. The shares trade on the Nasdaq Global Select Market under the symbol“SNDX.” In connection with the closing of the Company’s IPO, the Company filed an amended and restated certificate of incorporation and adopted amended andrestated bylaws, both of which were approved by the Company’s board of directors and stockholders on September 28, 2015 and February 24, 2016, respectively.Pursuant to the amended and restated certificate of incorporation, the Company is now authorized to issue 100,000,000 shares of common stock and 10,000,000shares of preferred stock.Since its inception, the Company has devoted its efforts principally to research and development and raising capital. The Company is subject to riskscommon to companies in the development stage, including, but not limited to, successful development of therapeutics, obtaining additional funding, protection ofproprietary therapeutics, compliance with government regulations, fluctuations in operating results, dependence on key personnel and collaborative partners, andrisks associated with industry changes. The Company’s long-term success is dependent upon its ability to successfully develop and market its product candidates,expand its oncology drug pipeline, earn revenue, obtain additional capital when needed, and ultimately, achieve profitable operations. The Company anticipatesthat it will be several years before either entinostat or SNDX-6352 is approved, if ever, and the Company begins to generate revenue from sales of entinostat andSNDX-6352. Accordingly, management expects to incur substantial losses on the ongoing development of entinostat and SNDX-6352 and does not expect toachieve positive cash flow from operations for the foreseeable future, if ever. As a result, the Company will continue to require additional capital to move forwardwith its business plan. While certain amounts of this additional capital were raised in the past, there can be no assurance that funds necessary beyond these amountswill be available in amounts or on terms sufficient to ensure ongoing operations. F-8Table of ContentsThe Company’s management believes that the cash, cash equivalents and short-term investments balances as of December 31, 2016 should enable theCompany to maintain its planned operations for at least the next 12 months. The Company’s ability to fund all of its planned operations internally beyond that date,including the completion of its ongoing and planned clinical trial activities, may be substantially dependent upon whether the Company can obtain sufficientfunding on terms acceptable to the Company. Proceeds from additional capital transactions would allow the Company to accelerate and/or expand its plannedresearch and development activities. In the event that sufficient funds were not available, the Company may be required to delay or reduce expenditures to conservecash, which could involve scaling back or curtailing development and general and administrative activities.2. Basis of PresentationThe Company has prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the UnitedStates of America (“U.S. GAAP”).On February 24, 2016, the Company effected a 1-for-1.25 reverse stock split of the Company’s outstanding common stock and convertible preferred stock;and on June 3, 2014, the Company effected a 1-for-12.3 reverse stock split of the Company’s outstanding common stock and convertible preferred stock.Stockholders entitled to fractional shares as a result of the reverse stock splits received a cash payment in lieu of receiving fractional shares. All of the Company’shistorical share and per share information shown in the accompanying financial statements and related notes have been retroactively adjusted to give effect to thesereverse stock splits.In 2011, the Company established a wholly owned subsidiary in the United Kingdom. There have been no activities for this entity to date. In 2014, theCompany established a wholly owned U.S. subsidiary, Syndax Securities Corporation. The consolidated financial statements include the accounts of the Companyand its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.3. Summary of Significant Accounting PoliciesUse of EstimatesThe preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reportedamounts of costs and expenses during the reporting period. The Company bases estimates and assumptions on historical experience when available and on variousfactors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actualresults may differ from these estimates under different assumptions or conditions.Cash EquivalentsCash equivalents include all highly liquid investments maturing within 90 days or less from the date of purchase. Cash equivalents include money marketfunds, corporate debt securities, U.S. government agency notes, and overnight deposits.Restricted CashThe Company classifies as restricted cash all cash pledged as collateral to secure long-term obligations and all cash whose use is otherwise limited bycontractual provisions. Amounts are reported as non-current unless restrictions are expected to be released in the next 12 months. F-9Table of ContentsShort-Term InvestmentsShort-term investments include marketable securities with maturities of less than one year or where management’s intent is to use the investments to fundcurrent operations or to make them available for current operations. All investments in marketable securities are classified as available-for-sale and are reported atfair value with unrealized gains and losses excluded from earnings and reported net of tax in accumulated other comprehensive income, which is a component ofstockholders’ equity (deficit). Unrealized losses that are determined to be other-than-temporary, based on current and expected market conditions, are recognized inearnings. Declines in fair value determined to be credit related are charged to earnings. The cost of marketable securities sold is determined by the specificidentification method. Investments with remaining maturities or that are due within one year from the balance sheet date are classified as current.Segment ReportingOperating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chiefoperating decision maker, or decision making group, in making decisions regarding resource allocation and assessing performance. The Company has oneoperating segment.Other AssetsOther assets consist of deferred issuance costs, long-term security deposits, and noncurrent restricted cash. Deferred issuance costs consist primarily of directincremental legal and accounting fees relating to the Company’s IPO. As of December 31, 2016 and 2015, the Company had capitalized deferred IPO issuancecosts of $0 and $1.6 million, respectively. Upon the closing of the IPO, these costs were reclassified to additional paid-in capital as a reduction of the IPO proceeds.In September 2014, the Company determined that it was likely its IPO would be postponed for a period in excess of 90 days. As a result, in accordance withthe Securities and Exchange Commission guidance in Staff Accounting Bulletin Topic 5-A, Expenses of Offering, the Company expensed as general andadministrative expenses previously deferred IPO costs of $4.3 million.Concentrations of Credit RiskCash and cash equivalents, restricted cash, and short-term investments are financial instruments that potentially subject the Company to concentrations ofcredit risk. Substantially all of the Company’s cash, cash equivalents, and short-term investments were deposited in accounts at two financial institutions, and attimes, such deposits may exceed federally insured limits. The Company has not experienced any losses in such accounts, and management believes that theCompany is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company’savailable-for-sale investments primarily consist of U.S. Treasury securities, U.S. government agency securities, corporate debt securities, certificates of deposit andovernight deposits and potentially subject the Company to concentrations of crdit risk.Property and EquipmentProperty and equipment are recorded at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets (three tofive years). Assets under capital leases are amortized over the shorter of their useful lives or lease term using the straight-line method. Major replacements andimprovements are capitalized, while general repairs and maintenance are expensed as incurred. F-10Table of ContentsImpairment of Long-Lived AssetsLong-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not berecoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If thiscomparison indicates that there is impairment, the amount of impairment is calculated as the difference between the carrying value and fair value. To date, no suchimpairments have been recognized.Revenue RecognitionThe Company enters into license agreements for the development and commercialization of its product candidates, entinostat and SNDX-6352. Licenseagreements may include non-refundable upfront payments, contingent payments based on the occurrence of specified events under the Company’s licensearrangements, partial or complete reimbursement of research and development expenses, license fees and royalties on sales of entinostat if they are successfullyapproved and commercialized. The Company’s performance obligations under the license agreements may include the transfer of intellectual property rights in theform of licenses, obligations to provide research and development services and related materials and participation on certain development and/or commercializationcommittees with the collaboration partners.Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) transfer of technology has been completed, services have been performedor products have been delivered, (iii) the fee is fixed and determinable, and (iv) collection is reasonably assured. For revenue agreements with multiple-elements,the Company identifies the deliverables included within the agreement and evaluates which deliverables represent separate units of accounting based on theachievement of certain criteria including whether the deliverable has stand-alone value. Upfront payments received in connection with licenses of the Company’stechnology rights are deferred if facts and circumstances dictate that the license does not have stand-alone value and are recognized as license revenue over theestimated period of performance that is generally consistent with the terms of the research and development obligations contained in the specific license agreement.The Company periodically reviews its estimated periods of performance based on the progress under each arrangement and accounts for the impact of anychanges in estimated periods of performance on a prospective basis. At the inception of each agreement that includes milestone payments, the Company evaluateswhether each milestone is substantive and at risk to both parties on the basis of the contingent nature of the milestone. The Company evaluates factors such as thescientific, regulatory, commercial and other risks that must be overcome to achieve the respective milestone, the level of effort and investment required to achievethe respective milestone and whether the milestone consideration is reasonable relative to all deliverables and payment terms in the arrangement in making thisassessment. Non-refundable payments that are contingent upon achievement of a substantive milestone are recognized in their entirety in the period in which themilestone is achieved, assuming all other revenue recognition criteria are met. Other contingent payments in which a portion of the milestone consideration isrefundable or adjusts based on future performance or non-performance (e.g., through a penalty or claw-back provision) are not considered to relate solely to pastperformance, and therefore, not considered substantive. Amounts that are not recognized as revenue due to the uncertainty as to whether they will be retained orbecause they are expected to be refunded are recorded as a liability. The Company recognizes non-substantive milestone payments over the remaining estimatedperiod of performance once the milestone is achieved. Contingent payments associated with the achievement of specific objectives in certain contracts that are notconsidered substantive because the Company does not contribute effort to the achievement of such milestones are recognized as revenue upon achievement of theobjective, as long as there are no undelivered elements remaining and no continuing performance obligations by the Company, assuming all other revenuerecognition criteria are met. F-11Table of ContentsResearch and DevelopmentResearch and development costs are expensed as incurred. Research and development expenses include payroll and personnel expenses, consulting costs,external contract research and development expenses, and allocated overhead, including rent, equipment depreciation, and utilities. Research and development coststhat are paid in advance of performance are capitalized as a prepaid expense and amortized over the service period as the services are provided. The Companyexpense upfront license payments related to acquired technologies that have not yet reached technological feasibility and have no alternative future use.In instances where the Company enters into cost-sharing arrangements, all research and development costs reimbursed by the collaborators are accounted foras reductions to research and development expense. During the year ended December 31, 2016, the Company incurred $0.5 million in external costs related to cost-sharing collaborations, of which $0.3 million has been recorded as a reduction to research and development expense. There were no cost-sharing arrangements in2015 or 2014.Clinical Trial CostsClinical trial costs are a component of research and development expenses. The Company accrues and expenses clinical trial activities performed by thirdparties based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or other informationprovided to us by our vendors.Income TaxesThe Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the Company’s financialstatement carrying amounts and the tax bases of assets and liabilities and for loss and credit carryforwards using enacted tax rates expected to be in effect in theyears in which the differences reverse. A valuation allowance is provided to reduce the net deferred tax assets to the amount that will more likely than not berealized. The Company determines whether it is more likely than not that a tax position will be sustained upon examination. If it is not more likely than not that aposition will be sustained, none of the benefit attributable to the position is recognized. The tax benefit to be recognized for any tax position that meets the more-likely-than-not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon resolution of the contingency. TheCompany accounts for interest and penalties related to uncertain tax positions as part of its provision for income taxes.Guarantees and IndemnificationsAs permitted under Delaware law, the Company indemnifies its officers, directors, and employees for certain events or occurrences that happen by reason ofthe relationship with, or position held at, the Company. The Company has standard indemnification arrangements under office leases (as described in Note 16) thatrequire it to indemnify the landlord against all costs, expenses, fines, suits, claims, demands, liabilities, and actions directly resulting from any breach, violation, ornonperformance of any covenant or condition of the Company’s lease. Through December 31, 2016, the Company had not experienced any losses related to theseindemnification obligations and no claims were outstanding. The Company does not expect significant claims related to these indemnification obligations, andconsequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.Stock-Based CompensationThe Company accounts for all stock option awards granted to employees and non-employees using a fair value method. Stock-based compensation ismeasured at the grant date fair value of employee stock option grants and is recognized over the requisite service period of the awards (usually the vesting period)on a straight-line basis, net of estimated forfeitures. Stock option awards to non-employees are subject to periodic revaluation over their vesting terms. F-12Table of ContentsConvertible Preferred StockUpon closing of the IPO, all of the outstanding shares of the Company’s outstanding convertible preferred stock converted into shares of the common stock.Prior to the IPO, the Company had classified certain series of convertible preferred stock as temporary equity in the consolidated balance sheets due to certainchange in control events that were outside of the Company’s control, including liquidation, sale, or transfer of control of the Company, as holders of the convertiblepreferred stock could cause redemption of the shares in these situations. The carrying value of the convertible preferred stock was presented at its maximumredemption value. As of December 31, 2015, the Series A preferred stock had no liquidation preference and was presented in permanent equity.Debt DiscountThe Company has recorded the fair value of the derivative liability related to its term loans as debt discount, which is presented in the consolidated balancesheets as an offset to the carrying value amount of the debt. Debt discount is amortized to interest expense using the effective interest rate method or a method thatapproximates the effective interest rate method over the expected period that the debt is expected to be outstanding. In October 2015, the Company prepaid theoutstanding balance on the term loans and wrote off the unamortized debt discount related to the term loans.Derivative LiabilitiesThe Company records potential payments that would be made to lenders upon certain triggering events as derivative financial liabilities. The derivativeliability is initially valued at fair value using a probability-weighted expected return model. Gains and losses arising from changes in fair value are recognized inother income (expense) in the consolidated statement of operations at each period end while such liabilities are outstanding.Common Stock WarrantsThe Company has recorded common stock warrants issued with license agreements as derivative financial liabilities, as the terms of the warrants are notfixed due to potential adjustments in the exercise price and/or the number of shares issuable under the warrants. The common stock warrants are initially recordedat fair value, with gains and losses arising from changes in fair value recognized in other income (expense) in the consolidated statement of operations at eachperiod end while such instruments are outstanding. The warrant liabilities were valued using a Black-Scholes option-pricing model. Upon the closing of the IPO,the Company’s outstanding warrant liability was reclassified to additional paid-in capital.Recently Issued and Adopted Accounting PronouncementsIn November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU 2016-18, “Statement of CashFlows (Topic 230): Restricted Cash” (“ASU 2016-18”). ASU 2016-18 requires that restricted cash and restricted cash equivalents be included with cash and cashequivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The statement of cash flows must alsoexplain the change during the period in the total of cash, cash equivalents, and restricted cash or restricted cash equivalents. For public business entities, this ASUis effective for fiscal years beginning after December 15, 2017. The Company does not expect the adoption of this standard to have a material impact on itsconsolidated financial statements.In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based PaymentAccounting (“ASU 2016-09”). ASU 2016-09 simplifies several aspects related to the accounting for share-based payment transactions, including the accounting forincome taxes, forfeitures, statutory tax withholding requirements and classification on the statement of cash flows. ASU 2016-09 will be effective for the Companyon January 1, 2017. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. F-13Table of ContentsIn February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842) .” Under ASU 2016-02, lessees will be required to recognize, for all leases of 12months or more, a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. Additionally, theguidance requires improved disclosures to help users of financial statements better understand the nature of an entity’s leasing activities. This ASU is effective forpublic reporting companies for interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must be adopted using amodified retrospective approach. The standard will be effective for the Company on January 1, 2019. The Company is in the process of evaluating the effect of thenew guidance on the Company’s consolidated financial statements and related disclosures.In August 2014, FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (“ASU 2014-15”). ASU 2014-15 provides guidance onmanagement’s responsibility in evaluating whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a goingconcern within one year from the date the financial statements are issued, and about related footnote disclosures. ASU 2014-15 is effective for the annual periodending after December 15, 2016, and for annual periods and interim periods thereafter. The Company adopted ASU 2014-15 for the year ended December 31,2016, and the adoption of this standard did not impact the Company’s consolidated financial statements and related disclosures.In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognitionrequirements of FASB Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition and most industry-specific guidance throughout theAccounting Standards Codification, resulting in the creation of FASB ASC Topic 606, Revenue from Contracts with Customers . ASU 2014-09 requires entities torecognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entityexpects to be entitled to in exchange for those goods or services. Adoption will be permitted using either a retrospective or modified retrospective approach. In July2015, FASB voted to delay the effective date of the standard by one year to the first quarter of 2018 to provide companies sufficient time to implement thestandard. Early adoption will be permitted, but not before the first quarter of 2017. The Company is currently evaluating the method by which it will implement thisstandard and the impact of the adoption of this standard on the Company’s consolidated financial statements.4. Net Loss per Share Attributable to Common StockholdersBasic net loss attributable to common stockholders per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Because the Company has reported a net loss for the three years ended December 31, 2016, 2015,and 2014, diluted net loss per common share is the same as basic net loss per common share for those periods. The following table summarizes the computation ofbasic and diluted net loss per share attributable to common stockholders of the Company (in thousands, except per share data): Years Ended December 31, 2016 2015 2014 Numerator—basic and diluted: Net loss $(44,472) $(24,119) $(19,828) Accretion of convertible preferred stock dividends (2,598) (10,011) (6,529) Accretion of convertible preferred stock to redemption value — (69,715) — Net loss attributable to common stockholders—basic and diluted $(47,070) $(103,845) $(26,357) Net loss per share—basic and diluted $(3.22) $(1,519.27) $(453.02) Denominator—basic and diluted: Weighted-average common shares used to compute net loss per share—basic and diluted 14,619,716 68,352 58,181 F-14Table of ContentsThe following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares outstanding because suchsecurities have an antidilutive impact due to losses reported (in common stock equivalent shares): December 31, 2016 2015 2014 Convertible preferred stock — 12,872,551 6,246,041 Options to purchase common stock 2,560,737 2,606,195 831,148 Common stock warrant 357,840 277,486 127,099 Convertible notes and related accrued interest — — 363,294 Restricted stock subject to future vesting 8,542 14,684 — 5. Significant AgreementsUCB Biopharma SprlIn July 2016, the Company entered into a license agreement (the “UCB License Agreement”) with UCB Biopharma Sprl (“UCB”), under which UCBgranted to the Company a worldwide, sublicenseable, exclusive license to UCB6352, which the Company refers to as SNDX-6352, an IND-ready anti-CSF-1Rmonoclonal antibody. The Company made a nonrefundable upfront payment of $5.0 million to UCB in the third quarter of 2016. Additionally, subject to theachievement of certain milestone events, the Company may be required to pay UCB up to $119.5 million in one-time development and regulatory milestonepayments over the term of the UCB License Agreement. In the event that the Company or any of its affiliates or sublicensees commercializes SNDX-6352, theCompany will also be obligated to pay UCB low double-digit royalties on sales, subject to reduction in certain circumstances, as well as up to an aggregate of$250.0 million in potential one-time, sales-based milestone payments based on achievement of certain annual sales thresholds. Under certain circumstances, theCompany may be required to share a percentage of non-royalty income from sublicensees, subject to certain deductions, with UCB. The Company will be solelyresponsible for the development and commercialization of SNDX-6352, except that UCB is performing a limited set of transitional chemistry, manufacturing andcontrol tasks related to SNDX-6352. Each party may terminate the UCB License Agreement for the other party’s uncured material breach or insolvency; and theCompany may terminate the UCB License Agreement at will at any time upon advance written notice to UCB. UCB may terminate the UCB License Agreement ifthe Company or any of its affiliates or sublicensees institutes a legal challenge to the validity, enforceability, or patentability of the licensed patent rights. Unlessterminated earlier in accordance with its terms, the UCB License Agreement will continue on a country-by-country and product-by-product basis until the later of:(i) the expiration of all of the licensed patent rights in such country; (ii) the expiration of all regulatory exclusivity applicable to the product in such country; and(iii) 10 years from the date of the first commercial sale of the product in such country.As of the date of the UCB License Agreement, the asset acquired had no alternative future use nor had it reached a stage of technological feasibility. As theprocesses or activities that were acquired along with the license do not constitute a “business,” the transaction has been accounted for as an asset acquisition. As aresult of these findings, the upfront payment of $5.0 million has been recorded as research and development expense in the consolidated statements of operations.Kyowa Hakko Kirin Co., Ltd.On December 19, 2014 (the “Effective Date”), the Company entered into a license agreement (the “KHK License Agreement”) with Kyowa Hakko KirinCo., Ltd. (“KHK”), under which the Company granted KHK an exclusive license to develop and commercialize entinostat in Japan and Korea. Under the terms ofthe KHK License Agreement, the Company will be responsible for the manufacture and supply of the products during the development activities. In addition to thelicense and manufacturing obligations, the Company is obligated to provide KHK access to know-how and regulatory information the Company may develop overthe life of the entinostat patent. Lastly, to the extent additional intellectual property is developed during the term of the F-15Table of Contentsagreement, KHK will receive the right to the intellectual property when and if available. KHK will conduct the development, regulatory approval filings, andcommercialization activities of entinostat in Japan and Korea. KHK paid the Company $25.0 million upfront, which included a $7.5 million equity investment of536,049 shares of Series B-1 convertible preferred stock and a $17.5 million non-refundable cash payment. In addition, to the extent certain development andcommercial milestones are achieved, KHK will be required to pay the Company up to $75.0 million in milestone payments over the term of the license agreement.The term of the agreement commenced on the Effective Date and, unless earlier terminated in accordance with the terms of the agreement, will continue on acountry-by-country and product-by-product basis, until the later of: (i) the date all valid claims of the last effective patent among the Company’s patents expires oris abandoned, withheld, or is otherwise invalidated in such country; and (ii) 15 years from the date of the first commercial sale of a product in the Japan or Korea.The purchase of the Series B-1 and the up-front payment of the license fee were accounted for separately. The Company allocated the amount ofconsideration related to Series B-1 equal to the fair value of the Series B-1 shares on the Effective Date based on a share price of $14.39 per share, which resultedin $7.7 million of proceeds allocated to the Series B-1 and the remaining consideration of $17.3 million allocated to the up-front license fee. The fair value of theSeries B-1 of $14.39 per share was based on a contemporaneous valuation. The Company received $7.5 million and issued the Series B-1 in January 2015 andreceived the remaining $17.5 million in February 2015. On the date of issuance, the Company recorded accretion of $5.4 million to record the Series B-1 at itsredemption value.The Company has concluded that this agreement is within the scope of ASC 605-25, Revenue Recognition, Multiple-Element Arrangements . Pursuant to thisguidance, the Company identified the following deliverables: (i) licenses, (ii) clinical supply and manufacturing obligations, (iii) rights to access and use materialsand data, and (iv) rights to additional intellectual property. All other potential deliverables included in the arrangement have been deemed either contingent orinconsequential or perfunctory, individually and in the aggregate. Moreover, the Company has evaluated all deliverables included in the KHK License Agreementand determined that there are two units of accounting in connection with its obligations at inception under the KHK License Agreement: (i) license unit ofaccounting and (ii) rights to additional intellectual property. The first three deliverables identified above comprise the license unit of accounting. The Companyconcluded that the stand-alone selling price for the rights to additional intellectual property unit of account is immaterial. As such, the entire $17.3 million allocatedto the upfront payment was allocated to the license unit of accounting.The arrangement consideration allocated to the license unit of accounting will be recognized as revenue ratably over the Company’s expected services period(currently expected to be through 2029) commencing on the date of the first delivery of the clinical trial materials. In June 2015, the Company began deliveringclinical materials to KHK and commenced recognizing revenue from the upfront consideration of $17.3 million. During the years ended December 31, 2016 and2015, the Company recognized $1.2 million and $0.6 million, respectively, of revenue associated with the KHK License Agreement. As of December 31, 2016,there was $15.4 million of deferred revenue related to the KHK License Agreement, which is classified as current or long-term in the consolidated balance sheets.In October 2016, the Company entered into a clinical trial co-funding agreement with KHK under which the Company will expand its clinical trialagreement with Eastern Cooperative Oncology Group (the “ECOG Agreement”) to include enrollments from sites in Korea.Eastern Cooperative Oncology GroupIn March 2014, the Company entered into the “ECOG Agreement with Eastern Cooperative Oncology Group, a contracting entity for the EasternCooperative Oncology Group—American College of Radiology Imaging Network Cancer Research Group (“ECOG-ACRIN”), that describes the parties’obligations with respect to the NCI-sponsored pivotal Phase 3 clinical trial of entinostat. Under the terms of the ECOG Agreement, F-16Table of ContentsECOG-ACRIN will perform this clinical trial in accordance with the clinical trial protocol and a mutually agreed scope of work. The Company will provide a fixedlevel of financial support for the clinical trial through an upfront payment of $695,000 and a series of payments of up to $1.0 million each that are comprised ofmilestone payments through the completion of enrollment and time-based payments through the completion of patient monitoring post-enrollment. In addition, theCompany is obligated to supply entinostat and placebo to ECOG-ACRIN for use in the clinical trial. During the second quarter of 2016, the ECOG Agreement wasamended to provide additional study activities and the contractual obligation increased by $0.8 million. As of December 31, 2016, the Company’s aggregatepayment obligations under this agreement were approximately $21.4 million; and as of December 31, 2016, the Company’s remaining payment obligations areapproximately $12.9 million over an estimated period of approximately four years. During the first quarter of 2017, the ECOG Agreement was amended to expandthe study to include enrollments from sites in Korea and the contractual obligation increased by $0.5 million.Data and inventions from the Phase 3 clinical trial are owned by ECOG-ACRIN. The Company has access to the data generated in the clinical trial, bothdirectly from ECOG-ACRIN under the ECOG Agreement as well as from the NCI. Additionally, ECOG-ACRIN has granted the Company a non-exclusiveroyalty-free license to any inventions or discoveries that are derived from entinostat as a result of its use during the clinical trial, along with a first right to negotiatean exclusive license to any of these inventions or discoveries. Either party may terminate the ECOG Agreement in the event of an uncured material breach by theother party or if the FDA or NCI withdraws the authorization to perform the clinical trial in the United States. The parties may jointly terminate the ECOGAgreement if the parties agree that safety-related issues support termination of the clinical trial.The Company records the appropriate clinical trial expenses in its financial statements by matching those expenses with the period in which the services andefforts are expended. The Company accounts for these expenses according to the progress of the clinical trial as measured by patient enrollment and the timing ofvarious aspects of the clinical trial. The Company determines accrual estimates through financial models, taking into account discussion with applicable personneland ECOG-ACRIN as to the progress or state of consummation of the clinical trial or the services completed.Bayer Pharma AG (formerly known as Bayer Schering Pharma AG)In March 2007, the Company entered into a license agreement (the “Bayer Agreement”) with Bayer Schering Pharma AG (“Bayer”) for a worldwide,exclusive license to develop and commercialize entinostat and any other products containing the same active ingredient. Under the terms of the Bayer Agreement,the Company paid a nonrefundable up-front license fee of $2.0 million and is responsible for the development and marketing of entinostat. The Company recordedthe $2.0 million license fee as research and development expense during the year ended December 31, 2007, as it had no alternative future use. The Company willpay Bayer royalties on a sliding scale based on net sales, if any, and make future milestone payments to Bayer of up to $150.0 million in the event that certainspecified development and regulatory goals and sales levels are achieved. In June 2014, a development milestone was achieved, and the Company recorded $2.0million of research and development expense, which has been fully paid.In connection with the Bayer Agreement, the Company issued to Bayer a warrant to purchase the number of shares of the Company’s common stock equal to1.75% of the shares of common stock outstanding on a fully diluted basis as of the earlier of the date the warrant is exercised or the closing of the IPO. Upon theclosing of the IPO, the total number of shares of the Company’s common stock issuable upon exercise of the warrant was set at 357,840. Prior to the closing of theIPO, the warrant contained anti-dilution protection to maintain Bayer’s potential ownership at 1.75% of the shares of common stock outstanding on a fully dilutedbasis, which requires that the actual number of shares of common stock issuable pursuant to the warrant be increased or decreased for any changes in the fullydiluted shares of common stock outstanding. The warrant is exercisable at an exercise price of $1.54 per share and expires upon the earlier of the 10-yearanniversary of the closing of the IPO or the F-17Table of Contentsdate of the consummation of a disposition transaction. The warrant was classified as a long-term liability and recorded at fair value with the changes in the fairvalue recorded in other expense. The Company used the Black-Scholes option-pricing model to determine the fair value of the warrant. Upon the closing of theIPO, the anti-dilution protection for the warrant expired, resulting in the reclassification of the warrant liability to additional paid-in capital. The warrant was re-measured on March 8, 2016, using current assumptions just prior to the reclassification.The total shares exercisable under the warrant, the fair value associated with the warrant and the Black-Scholes option-pricing model assumptions used tovalue the shares of common stock issuable pursuant to the warrant were as follows: Total Shares of Common Stock Issuable Under the Warrant Average Exercise Price Fair Value of Common Stock Estimated Volatility Risk-Free Interest Rate Estimated Dividend Yield Estimated Remaining Contractual Life (in years) Fair Value of Warrant Liability March 8, 2016 357,840 $1.54 $13.55 69% 1.82% 0.0% 10.00 $4,551 December 31, 2015 277,486 $1.54 $11.13 73% 2.15% 0.0% 8.06 $2,848 6. Property and Equipment, netProperty and equipment, net, consisted of the following (in thousands): December 31, 2016 2015 Office and computer equipment $117 $117 Furniture and fixtures 195 74 Office equipment under capital lease 13 13 Leasehold improvements 215 48 Construction in progress — 28 Total property and equipment 540 280 Accumulated depreciation (280) (192) Property and equipment, net $260 $88 7. Fair Value MeasurementsThe carrying amounts of cash and cash equivalents, restricted cash, accounts payable, and accrued expenses approximated their estimated fair values due tothe short-term nature of these financial instruments. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (anexit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.Valuation techniques used to measure fair value are performed in a manner to maximize the use of observable inputs and minimize the use of unobservable inputs.The accounting standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable,that may be used to measure fair value, which are the following: Level 1— Quoted prices in active markets that are accessible at the market date for identical unrestricted assets or liabilities.Level 2— Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices inmarkets that are not active; or other inputs for which all significant inputs are observable or can be corroborated by observable market data forsubstantially the full term of the assets or liabilities. F-18Table of ContentsLevel 3— Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.During the years presented, the Company has not changed the manner in which it values assets and liabilities that are measured at fair value using Level 3inputs. The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within thehierarchy during the years ended December 31, 2016, 2015 and 2014.A summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows (in thousands): Fair Value Measurements Using Total Carrying Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2016 Assets: Cash equivalents $23,844 $17,089 $6,755 $— Short-term investments 81,486 — 81,486 — Total assets $105,330 $17,089 $88,241 $— December 31, 2015 Assets: Cash equivalents $23,154 $9,208 $13,946 $— Short-term investments 63,310 — 63,310 — Total assets $86,464 $9,208 $77,256 $— Liabilities: Derivative liability $133 $— $— $133 Common stock warrant liability 2,848 — — 2,848 Total liabilities $2,981 $— $— $2,981 Cash equivalents of $17.1 million as of December 31, 2016 and $9.2 million as of December 31, 2015 consisted of overnight investments, money marketfunds and highly rated corporate bonds and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in activemarkets. Cash equivalents of $6.8 million as of December 31, 2016 and $13.9 million as of December 31, 2015 consisted of highly rated corporate bonds andcommercial paper and are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are eitherdirectly or indirectly observable as of the reporting date; and fair value is determined through the use of models or other valuation methodologies.Short-term investments of $81.5 million as of December 31, 2016 and $63.3 million as of December 31, 2015 consisted of commercial paper and highlyrated corporate bonds and are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which areeither directly or indirectly observable as of the reporting date; and fair value is determined through the use of models or other valuation methodologies.The short-term investments are classified as available-for-sale securities. As of December 31, 2016, the remaining contractual maturities of the available-for-sale securities were less than one year, and the balance in the Company’s accumulated other comprehensive income was comprised solely of activity related to theCompany’s available-for-sale securities. There were no realized gains or losses recognized on the sale or F-19Table of Contentsmaturity of available-for-sale securities during the three years ended December 31, 2016. As a result, the Company did not reclassify any amounts out ofaccumulated other comprehensive income for the same periods. The Company has a limited number of available-for-sale securities in insignificant loss positions asof December 31, 2016, which the Company does not intend to sell and has concluded it will not be required to sell before recovery of the amortized cost for theinvestment at maturity. The following table summarizes the available-for-sale securities (in thousands): Amortized Cost Unrealized Gains Unrealized Losses Fair Value December 31, 2016 Commercial paper $30,125 $61 $— $30,186 Corporate bonds 51,305 6 (11) 51,300 $81,430 $67 $(11) $81,486 December 31, 2015 Commercial paper $28,980 $48 $— $29,028 Corporate bonds 34,302 — (20) 34,282 $63,282 $48 $(20) $63,310 A roll-forward of the recurring fair value measurements of the common stock warrant liability and the derivative liability categorized with Level 3 inputs areas follows (in thousands): Common Stock Warrant Liability Derivative Liability Balance—January 1, 2014 $2,482 $— Initial fair value of derivative — 130 Change in fair value (1,789) (4) Balance—December 31, 2014 693 126 Change in fair value 2,155 7 Balance—December 31, 2015 2,848 133 Change in fair value 1,703 17 Reclassification (4,551) (150) Balance—December 31, 2016 $— $— The common stock warrant liability was recorded at fair value determined by using the Black-Scholes option-pricing model. This method of valuationinvolves using inputs such as the fair value of the Company’s common stock, stock price volatility, the contractual term of the warrant, risk-free interest rates, anddividend yields. Due to the nature of these inputs, the valuation of the warrant was considered a Level 3 measurement. Upon the closing of the IPO, the warrant wasreclassified to additional paid-in capital. See Note 5 for further discussion of the accounting for the Bayer common stock warrant as well as for a summary of thesignificant inputs and assumptions used to determine the fair value of the warrant.The derivative liability related to the contingent success fee owed under the term loans. Upon the completion of an IPO or upon the occurrence of certainchange of control or liquidation events, the Company was required to pay a $0.2 million success fee. The Company had recorded the success fee as a derivativefinancial liability. The initial fair value of the derivative of $0.1 million had been recorded as a debt discount. The term loans were paid in full in October 2015;however, the liability for the success fee survived the repayment of the term loans. Upon completion of the IPO this is no longer accounted for as a derivative, andthe success fee of $0.2 million that is payable by June 2018 is included in other long-term liabilities. F-20Table of Contents8. Prepaid Expenses and Other Current AssetsPrepaid expenses and other current assets consisted of the following (in thousands): December 31, 2016 2015 Short-term deposits $1,630 $805 Prepaid clinical supplies 461 210 Interest receivable on short-term investments 306 258 Reimbursable costs 262 2 Prepaid insurance 168 54 Other 202 135 Total prepaid expenses and other current assets $3,029 $1,464 9. Accrued Expenses and Other Current LiabilitiesAccrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2016 2015 Accrued professional fees $247 $561 Accrued compensation and related costs 1,641 698 Accrued clinical costs 4,493 574 Derivative liability — 133 Other 390 209 Total accrued expenses $6,771 $2,175 10. Convertible NotesIn September 2014, the Company entered into a bridge loan financing with various investors, in which it issued convertible unsecured promissory notes foran aggregate principal amount of $5.0 million (the “2014 Notes”), in two closings. The first closing occurred in September 2014 and $4.9 million was received, andthe balance of $0.1 million was received in October 2014. The 2014 Notes accrued interest at 6% per annum and had a maturity date of September 30, 2015 (the“Maturity Date”). The 2014 Notes were convertible upon the occurrence of the certain events during the period that the loans are outstanding. In June 2015, inconjunction with the Series C-1 financing, the outstanding principal of $5.0 million of the 2014 Notes and the related accrued interest of $0.2 million wereconverted into 372,446 shares of Series C-1 at $14.00 per share, which was the same price paid by Series C-1 investors.11. Long-Term DebtSolar Capital, Ltd, Term LoanIn June 2014, the Company entered into a loan and security agreement with Solar Capital Ltd. (“Solar”), as collateral agent and lender, consisting of a $15.0million senior secured term loan facility. The loan was secured by substantially all of the Company’s existing and after-acquired assets except its intellectualproperty, but including right of payment with respect to any such intellectual property and all proceeds from the disposition of any such intellectual property. Theintellectual property of the Company was subject to a negative pledge. In September and December 2014, the Company amended the term loan facility. The termloan facility had a maturity date of June 13, 2018. F-21Table of ContentsIn September 2014, the initial term loan (the “Term A Loan”), in the aggregate principal amount of $5.0 million was funded; and in December 2014, asecond term loan (the “Term C Loan”) in the aggregate principal amount of $4.0 million was funded with the following post-closing conditions: pursuant to theKHK License Agreement, the Company was required to receive $7.5 million in net equity proceeds no later than January 9, 2015 and was required to receive $17.5million in license-related proceeds no later than February 13, 2015, or return the $4.0 million of proceeds from Term Loan C to Solar. The Company achieved thepost-closing conditions.Interest accrued at a floating rate per annum equal to LIBOR plus 8.8%, payable monthly in arrears. The Company was required to make interest-onlypayments on any term loans funded under the term loan facility until July 1, 2015. Beginning on July 1, 2015, it was required to make payments of principal plusaccrued interest in equal monthly installments until the maturity date. In addition, the Company was required to pay a final fee equal to 4% of the amount of termloans funded that was due on the earlier of the maturity date of the term loan facility or upon the occurrence of certain change of control or liquidity events. TheCompany accrued the final fee of $0.4 million on the outstanding term loans through interest expense using the effective-interest method over the period that thedebt was outstanding. The Company incurred $0.3 million of debt issuance costs for this term loan facility, which were amortized as interest expense over theperiod that the related debt was outstanding.The Company had the option to prepay the term loans provided it paid a prepayment fee equal to 2% of the outstanding principal if paid prior to the one-yearanniversary and 1% of the outstanding principal if paid after the one-year anniversary of the funding. In October 2015, the Company prepaid the outstandingbalance on the term loans of $8.3 million plus accrued interest of $0.1 million and a final fee and prepayment penalty of $0.4 million. In conjunction with thisprepayment, the Company recorded an expense of $0.3 million for the final fee and prepayment penalty and wrote off $0.3 million of unamortized debt discountand deferred issuance costs related to the term loans.Upon the completion of an IPO or upon the occurrence of certain change of control or liquidity events, the Company is required to pay a $0.2 million successfee that will be due on the earlier of the maturity date of the term loan facility or upon the occurrence of certain change of control or liquidity events. The Companyinitially recorded the success fee as a derivative financial liability. The initial fair value of the derivative of $0.1 million was recorded as a debt discount. The termloans were paid in full in October 2015; however, the liability for the success fee survived the repayment of the term loans. Upon completion of the IPO, thesuccess fee is no longer considered a derivative liability. The success fee of $0.2 million is payable by June 2018 and included in other long-term liabilities.12. Convertible Preferred StockUpon the closing of the IPO, all of the outstanding shares of the Company’s convertible preferred stock were converted into 12,872,551 shares of itscommon stock. As of December 31, 2016, the Company does not have any convertible preferred stock issued or outstanding. In connection with the closing of theCompany’s IPO, the Company filed an amended and restated certificate of incorporation and adopted amended and restated bylaws; and pursuant to the amendedand restated certificate of incorporation, the Company is now authorized to issue 10,000,000 shares of preferred stock in one or more series and to fix the powers,designations, preferences and relative participating option or other rights thereof, including dividend rights, conversion rights, voting rights, redemption terms,liquidation preferences and the number of shares constituting any series, without any further vote or action by the Company’s shareholders. F-22Table of ContentsConvertible preferred stock consisted of the following (in thousands, except share data) as of December 31, 2015: Preferred Shares Designated IssuanceDate Preferred Shares Issued and Outstanding Liquidation Preference Carrying Value Series A-1 3,160,975 March 2013 2,801,745 $48,032 $65,666 Series B 3,382,113 March and August 2013 272,240 2,933 5,084 Series B-1 3,965,411 March, April, July, August and November 2013 and January 2015 3,568,020 96,348 96,348 Series C-1 6,090,481 June and August 2015 6,090,461 152,015 152,015 Total $319,113 Series A 3,512,194 March and August 2013 700,435 $— $7,231 In August 2015, the Company issued 4,377,902 additional shares of Series C-1 for $61.1 million in cash, net of offering costs of $0.2 million. On the date ofissuance, the Company recorded accretion of $46.1 million to record the convertible preferred stock at its redemption value.In June 2015, the Company issued 1,712,559 shares of Series C-1 for $18.5 million in cash, net of offering costs of $0.2 million, and the conversion of theoutstanding principal on the 2014 Notes of $5.0 million and related accrued interest of $0.2 million. On the date of issuance, the Company recorded accretion of$18.2 million to record the convertible preferred stock at its redemption value.In January 2015, in accordance with the terms of the KHK License Agreement, the Company issued 536,049 shares of Series B-1 at an issuance price of$14.39 per share, the fair value of the Series B-1 based on the results of a contemporaneous valuation. On the date of issuance, the Company recorded accretion of$5.4 million to record the convertible preferred stock at its redemption value.13. Common StockIn connection with the closing of the Company’s IPO, the Company filed an amended and restated certificate of incorporation and adopted amended andrestated bylaws; and pursuant to the amended and restated certificate of incorporation, the Company is now authorized to issue 100,000,000 shares of commonstock. The holders of each share of common stock are entitled to one vote per share held and are entitled to receive dividends, if and when declared by the Board,and to share ratably in the Company’s assets available for distribution to stockholders, in the event of liquidation.The Company has reserved for future issuance the following shares of common stock related to the potential warrant exercise, future vesting of restrictedstock, exercise of stock options, and the employee stock purchase plan: December 31, 2016 Common stock issuable under Bayer warrant 357,840 Options to purchase common stock 4,025,966 Restricted stock subject to future vesting 8,542 Employee Stock Purchase Plan 250,000 Total 4,642,348 F-23Table of Contents14. Stock-Based CompensationIn September 2015, the Company’s board of directors adopted its 2015 Omnibus Incentive Plan (“2015 Plan”), which was subsequently approved by itsstockholders and became effective upon the closing of the IPO on March 8, 2016. The 2015 Plan replaces the 2007 Stock Plan (“2007 Plan”) and allows for thegranting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, unrestricted stock, stock units, dividend equivalent rights,performance awards, annual incentive awards, and other equity-based awards to the Company’s executives and other employees, non-employee members of theboard of directors, and consultants of the Company. Any options or awards outstanding under the Company’s 2007 Plan remain outstanding and effective. Anyshares of common stock related to awards outstanding under the 2007 Plan that thereafter terminate by expiration, forfeiture, cancellation or otherwise without theissuance of such shares will be added to, and included in, the 2015 Plan reserve amount. The Company initially reserved 1,750,000 shares of its common stock forthe issuance of awards under the 2015 Plan. As of December 31, 2016, there were 1,465,229 shares available for issuance under the 2015 Plan.The 2015 Plan provides that the number of shares reserved and available for issuance under the 2015 Plan will automatically increase each January 1,beginning on January 1, 2017, by 4% of the outstanding number of shares of common stock on the immediately preceding December 31 or such lesser number ofshares as determined by the Company’s board of directors. On January 1, 2017, the shares available for issuance under the 2015 Plan were increased to 4,754,914.Stock OptionsThe Company recognized stock-based compensation expense related to the issuance of stock option awards to employees and non-employees in theconsolidated statements of operations as follows (in thousands): Years Ended December 31, 2016 2015 2014 Research and development $919 $846 $527 General and administrative 3,789 3,036 1,730 Total $4,708 $3,882 $2,257 As of December 31, 2016, there was $7.8 million of unrecognized compensation cost related to employee and non-employee unvested stock options andunvested restricted stock granted under the 2007 and 2015 Plans, which is expected to be recognized over a weighted-average remaining service period of 2.5years. Stock compensation costs have not been capitalized by the Company.The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model with the weighted-average assumptionsnoted in the table below. Expected volatility for the Company’s common stock was determined based on an average of the historical volatility of a peer group ofsimilar public companies. The Company estimated the expected term of its employee service-based stock options using the “simplified” method, whereby, theexpected term equals the average of the vesting term and the original contractual term of the option. The contractual life of the option was used for the estimatedlife of the non-employee grants. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. The risk-free interest rate for periods within the expected life of the option is based upon the U.S. Treasury yield curve in effect at the time of grant. The accountingguidance for stock-based compensation requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeituresdiffer from those estimates. The grant date fair values of options issued to employees F-24Table of Contentsand non-employees were estimated using the Black-Scholes option-pricing model with the following assumptions: Years Ended December 31, 2016 2015 2014 Expected term (in years) 5.85 5.89 5.96 Volatility rate 71.40% 69.92% 70.36% Risk-free interest rate 1.41% 1.73% 1.91% Expected dividend yield 0.00% 0.00% 0.00% In determining the exercise prices for options granted, the Board has considered the fair value of the common stock as of each grant date. Prior to our IPO,the fair value of the common stock underlying the stock options has been determined by the Board at each award grant date based upon a variety of factors,including the results obtained from an independent third-party valuation, the Company’s financial position and historical financial performance, the status oftechnological developments within the Company’s products, the composition and ability of the current clinical and management team, an evaluation or benchmarkof the Company’s competition, the current business climate in the marketplace, the illiquid nature of the common stock, arm’s-length sales of the Company’scapital stock (including convertible preferred stock), the effect of the rights and preferences of the preferred stockholders, and the prospects of a liquidity event,among others.A summary of employee and non-employee option activity under the Company’s equity award plans is presented below (in thousands, except share data): Number of Options WeightedAverage Exercise Price Weighted Average Remaining ContractualTerm (in years) AggregateIntrinsic Value Outstanding—January 1, 2016 2,606,195 $7.56 8.3 $9,463 Granted 478,530 $12.64 Exercised (441,573) $4.66 Canceled or forfeited (82,415) $8.87 Outstanding—December 31, 2016 2,560,737 $8.97 8.4 $503 Exercisable—December 31, 2016 2,234,249 $8.33 8.2 $503 Options vested, exercisable or expected to vest—December 31, 2016 2,503,957 $8.94 8.5 $504 The weighted-average grant date fair value of options granted during the years ended December 31, 2016, 2015 and 2014, was $7.94, $5.74 and $8.92,respectively. The fair value is being expensed over the vesting period of the options (usually three to four years) on a straight-line basis as the services are beingprovided.There were 441,573 options exercised for the year ended December 31, 2016, resulting in total proceeds of $2.1 million; and 41,607 options exercised for theyear ended December 31, 2015, resulting in total proceeds of $0.2 million, including 16,731 shares subject to repurchase by the Company. No options wereexercised in 2014. The intrinsic value of options exercised during the years ended December 31, 2016 and 2015 was $3.8 million, and $0.2 million, respectively. Inaccordance with the Company’s policy, the shares were issued from a pool of shares reserved for issuance under the 2007 and 2015 Plans.Upon the closing of the IPO in March 2016, the Company recorded $0.7 million of additional stock compensation expense related to certain options grantedto two of the Company’s executives. F-25Table of ContentsThe 2007 Plan allowed employees to exercise unvested options in exchange for restricted common stock. Such arrangements permitted the Company tosubsequently repurchase such shares at the exercise price if the vesting conditions were not satisfied. Such an exercise is not substantive for accounting purposes;therefore, the payment received by the Company for the exercise price is recognized as an early exercise liability on the Company’s consolidated balance sheet andwill be transferred to common stock and additional paid-in capital as such shares vest. The Company issued 16,731 shares of restricted common stock upon earlyexercise of stock options during the year ended December 31, 2015, with total proceeds of $0.1 million on the exercise date. As of December 31, 2016, 8,542unvested shares were legally issued and outstanding and subject to repurchase by the Company. In connection with these unvested shares, the Company hasrecorded a liability of $0.1 million, of which $42,000 is included in accrued expenses and other current liabilities and $17,000 is included in other long-termliabilities in the Company’s consolidated balance sheet.Employee Stock Purchase PlanIn September 2015, the Company’s Board adopted the Employee Stock Purchase Plan (the “ESPP”), which was subsequently approved by the Company’sstockholders in February 2016 and became effective upon the closing of our IPO on March 8, 2016. The ESPP authorizes the initial issuance of up to a total of250,000 shares of common stock to the Company’s employees. No offering periods have been approved at this time; and as of the December 31, 2016, no shares ofcommon stock have been purchased under the ESPP.Effective January 1, 2017, and continuing until the expiration of the ESPP, which is the earlier of (a) ten years after the date of adoption of the ESPP or(b) such time as all shares of common stock that may be made available for purchase under the ESPP have been issued, the number of common shares available forpurchase by the Company’s employees will automatically increase annually on January 1, beginning January 1, 2017, in an amount equal to the lesser of (i) 1% ofthe total number of issued and outstanding common stock as December 31 of the immediately preceding year or (ii) 250,000 shares of our common stock or suchlesser number of shares as determined by the Company’s board of directors. On January 1, 2017, the shares of common stock reserved for issuance under the ESPPwas increased to 432,237.Employee Benefit PlanThe Company has a Section 401(k) defined contribution savings plan for its employees. The plan covers substantially all employees who meet minimum ageand service requirements and allows participants to defer a portion of their annual compensation on a pretax basis, subject to legal limitations. Companycontributions to the plan may be made at the discretion of the Board. For the years ended December 31, 2016, 2015 and 2014, the Company made $72,000, $33,000and $0 contributions to the plan, respectively.15. Income TaxesThe Company has not recorded any net tax provision for the periods presented due to the losses incurred and the need for a full valuation allowance on netdeferred tax assets. The difference between the income tax expense at the U.S. federal statutory rate and the recorded provision is primarily due to the valuationallowance provided on all deferred tax assets. The Company’s loss before income tax for the periods presented was generated entirely in the United States. F-26Table of ContentsThe significant components of the Company’s deferred tax are as follows (in thousands): Years Ended December 31, 2016 2015 Deferred tax assets (liabilities): Net operating loss carryforwards $13,744 $14,598 Research and development credits 1,739 1,452 Capitalized start-up and research and development costs 47,048 37,641 Deferred revenue 5,420 — Depreciation and amortization (10,530) (8,433) Accruals 604 332 Other temporary differences 2,298 1,769 Deferred tax assets before valuation allowance 60,323 47,359 Valuation allowances (60,323) (47,359) Net deferred tax assets $— $— The Company has provided a valuation allowance for the full amount of the net deferred tax assets as the realization of the deferred tax assets is notdetermined to be more likely than not. The valuation allowance increased by $13.0 million and $6.6 million in 2016 and 2015, respectively, due to the increase indeferred tax assets, primarily due to increases in capitalized start-up and research and development costs.As of December 31, 2016, the Company had approximately $36.0 million and $27.5 million in federal and state Net Operating Losses (“NOLs”),respectively, which expire at various dates through 2036. As of December 31, 2016, the Company had federal and state research credits of $1.1 million and $0.9million, respectively, which begin to expire in 2021.Realization of future tax benefits is dependent on many factors, including the Company’s ability to generate taxable income within the net operating losscarryforward period. Under the Internal Revenue Code provisions, certain substantial changes in the Company’s ownership, including the sale of the Company orsignificant changes in ownership due to sales of equity, have limited and may limit in the future, the amount of net operating loss carryforwards which could beused annually to offset future taxable income. The Company completed an analysis through March 8, 2016 and determined that on March 30, 2007 and August 21,2015, ownership changes had occurred. The Company may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership,some of which may be outside the Company’s control. As a result, the Company’s ability to use our pre-change NOLs to offset U.S. federal taxable income may besubject to limitations, which could potentially result in increased future tax liability to the Company. In addition, at the state level, there may be periods duringwhich the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.As of December 31, 2016 and 2015, the Company had uncertain tax positions of $0.2 million related to capitalized research and development costs andresearch and development credits, which reduce the deferred tax assets with a corresponding decrease to the valuation allowance. The Company has elected torecognize interest and penalties related to income tax matters as a component of income tax expense, of which no interest or penalties were recorded for the yearsended December 31, 2016, 2015 and 2014. The Company expects none of the unrecognized tax benefits to decrease within the next 12 months related to expiredstatutes or settlement with the taxing authorities. Due to the Company’s valuation allowance as of December 31, 2016, none of the Company’s unrecognized taxbenefits, if recognized, would affect the effective tax rate. F-27Table of ContentsA reconciliation of the Company’s unrecognized tax benefits is as follows (in thousands): Years Ended December 31, 2016 2015 2014 Unrecognized tax benefit—beginning of year $241 $241 $680 Decreases related to prior period positions — — (439) Unrecognized tax benefit—end of year $241 $241 $241 The Company files tax returns in the United States, Massachusetts, California, South Carolina, New Jersey and New York. All tax years since inception(October 11, 2005) remain open to examination by major tax jurisdictions to which the Company is subject, as carryforward attributes generated in years past maystill be adjusted upon examination by the Internal Revenue Service or state tax authorities if they have or will be used in a future period. The Company is currentlynot under examination by the Internal Revenue Service or any other jurisdictions for any tax years.16. CommitmentsLicense AgreementsNovaMedica—In August 2013, in connection with the third tranche of its Series B-1 financing, the Company entered into a Technology Transfer Agreement(the “Tech Transfer Agreement”) with Domain Russia Investments Limited (“DRI”). Pursuant to the Tech Transfer Agreement, in exchange for nominal payment,the Company assigned to DRI certain patent applications and granted to DRI a license to develop and commercialize entinostat in certain Eastern Europeancountries (the “Covered Territory”). The Company concurrently entered into a sublicense agreement with DRI (the “DRI Sublicense”) and a sublicense agreement(the “NovaMedica Sublicense”) with NovaMedica LLC (“NovaMedica”), which is jointly owned by Rusnano Medinvest LLC and DRI. Pursuant to the DRISublicense, the Company granted to DRI an exclusive sublicense to develop, manufacture and commercialize entinostat in the Russian Federation. Pursuant to theNovaMedica Sublicense, the Company granted to NovaMedica an exclusive sublicense to develop, manufacture and commercialize entinostat in the rest of theCovered Territory. Immediately thereafter, the Company, DRI and NovaMedica executed an assignment and assumption agreement, pursuant to which the assignedpatents and all of DRI’s rights and obligations under the Tech Transfer Agreement and the DRI Sublicense were transferred to NovaMedica. Under the TechTransfer Agreement, in certain cases, the Company is required to assist NovaMedica, and NovaMedica is required to reimburse the Company for any out-of-pocketexpenses incurred in providing this assistance, including travel-related expenses.Eddingpharm—In April 2013, the Company entered into a License and Development Agreement (the “Eddingpharm License Agreement”) and a Series B-1purchase agreement (the “Eddingpharm Purchase Agreement”) with Eddingpharm International Company Limited (“Eddingpharm”). Under the terms of theEddingpharm License Agreement, Eddingpharm, in exchange for rights to develop and commercialize entinostat in China and certain other Asian countries,purchased $5.0 million of Series B-1 and agreed to make certain contingent milestone and royalty payments based on revenue targets. In certain cases, theCompany is required to assist Eddingpharm, and Eddingpharm is required to reimburse the Company for any out-of-pocket expenses incurred in providing thisassistance, including reimbursement for person-hours above a certain cap.Lease CommitmentsIn September 2016, the Company entered into a new five-year operating lease for approximately 12,207 square feet of office space in Waltham,Massachusetts, with a lease commencement date of March 1, 2017, and an option to extend the lease term once for an additional three years. The Company also hasan option to cancel the lease after three years with the termination fee consisting of $55,000. The Company’s existing Waltham lease expires in April 2017 and willrelocate to the new space on March 1, 2017. The lease has monthly lease payments F-28Table of Contentsof $25,000 the first 12 months with annual rent escalations thereafter and provides a rent abatement of $0.2 million for the first year. The Company will record thelease abatement as deferred rent and will amortize these amounts on a straight-line basis as a reduction of rent expense over the lease term. The Company paid thelandlord a security deposit of $0.1 million in 2016, which will be returned without interest at the end of the lease. The Company recorded the security deposit as along-term deposit on its consolidated balance sheet.In December 2015, the Company entered into a new 62-month building lease for approximately 4,039 square feet of space in New York, New York, whichcommenced on January 1, 2016. The lease has monthly lease payments of $18,000 the first 12 months with an annual rent escalation each year thereafter andprovides a rent abatement of $18,000 per month for the first two months. The Company also has an option to cancel the lease after three years with the terminationfee consisting of three months of rent. The Company recorded the lease abatement as deferred rent and will amortize these amounts on a straight-line basis as areduction of rent expense over the lease term. In accordance with the lease, in December 2015, the Company entered into a cash-collateralized irrevocable standbyletter of credit in the amount of $0.1 million naming the landlord as beneficiary.In December 2013, the Company entered into a 40-month lease for approximately 4,712 square feet of office space in Waltham, Massachusetts. TheCompany also leases office equipment, which is accounted for as a capital lease and included in property and equipment at cost.Future annual minimum lease payments as of December 31, 2016, are as follows (in thousands): OperatingLeases Capital Lease Obligations For the years ended December 31, 2017 $396 $4 2018 524 3 2019 569 — 2020 588 — 2021 395 — 2022 and thereafter 59 — Total minimum lease payments $2,531 7 Less amounts representing interest 1 Present value of net minimum lease payments $6 Rent expense recognized under all operating leases, including additional rent charges for utilities, maintenance, and real estate taxes, is calculated on astraight-line basis and amounted to $0.4 million, $0.1 million and $0.1 million for the years ended December 31, 2016, 2015, and 2014, respectively. F-29Table of Contents17. Supplemental Cash Flow Information Years Ended December 31, 2016 2015 2014 (In thousands) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $2 $688 $170 SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING ANDFINANCING ACTIVITIES: Accretion of convertible preferred stock to redemption value $— $69,715 $— Accretion of dividends on convertible preferred stock $2,598 $10,011 $6,529 Conversion of convertible notes and accrued interest into Series C-1 convertible preferredstock $— $5,211 $— Term loan proceeds allocated to derivative liability $— $— $130 Issuance costs included in accounts payable and accrued expenses $— $376 $614 Property and equipment purchases included in accrued expenses $— $27 $3 Vesting of restricted stock $42 $14 $— Reclassification of common stock warrant liability to additional paid-in capital $4,551 $— $— Conversion of preferred stock to common stock upon closing of initial public offering $328,941 $— $— 18. Related-Party TransactionsIn June 2015, the Company hired a Chief Executive Officer who was also appointed as a member of the Board. This individual is also a managing director atMPM Asset Management, LLC, which holds an investment in the Company’s common stock.In June 2015, in conjunction with the Series C-1 financing, the Company issued 1,130,740 shares of Series C-1 convertible preferred stock for total grossproceeds, including 2014 Notes conversion and cash purchase price, of $12.7 million to existing stockholders of the Company; and in August 2015 in conjunctionwith the Series C-1 financing, the Company issued 474,628 shares of Series C-1 convertible preferred stock for total gross proceeds of $5.3 million to an existingstockholder of the Company. See Note 12 for further discussion.In September 2014, the Company issued $5.0 million of 2014 Notes to stockholders of the Company. In June 2015, in conjunction with the Series C-1financing, the outstanding principal of $5.0 million and the related accrued interest of $0.2 million on the 2014 Notes were converted into 465,563 shares of SeriesC-1. As of December 31, 2015, no amount of principal or related accrued interest on the 2014 Notes was outstanding. As of December 31, 2014, an aggregate of$5.0 million of principal was outstanding under the 2014 Notes and $0.1 million of related accrued interest were held by stockholders of the Company. Interestexpense related to the 2014 Notes held by these stockholders was $0.3 million and $0.1 million for the years ended December 31, 2015 and 2014, respectively. F-30Table of Contents19. Quarterly financial information (unaudited)The following table contains quarterly financial information for 2016 and 2015. The Company believes that the following information reflects all normalrecurring adjustments necessary for a fair statement of the information for the periods presented. The operating results for any quarter are not necessarily indicativeof results for any future period. Three Months Ended 2016 In thousands, except per share data March 31 June 30 September 30 December 31 License fees $305 $305 $305 $305 Operating expenses: Research and development (1) 4,786 6,131 12,274 8,474 General and administrative 4,272 2,808 3,269 2,972 Total expenses 9,058 8,939 15,543 11,446 Loss from operations (8,753) (8,634) (15,238) (11,141) Other (expense) income (1,577) 276 269 326 Net loss $(10,330) $(8,358) $(14,969) $(10,815) Net loss per share attributable to common stockholders—basic and diluted $(2.85) $(0.47) $(0.84) $(0.59) Weighted-average shares—basic and diluted 4,541,536 17,769,514 17,899,481 18,193,027 Three Months Ended 2015 In thousands, except per share data March 31 June 30 September 30 December 31 License fees $— $17 $305 $305 Operating expenses: Research and development 1,723 2,271 2,968 2,587 General and administrative 2,711 3,288 3,195 2,397 Total expenses 4,434 5,559 6,163 4,984 Loss from operations (4,434) (5,542) (5,858) (4,679) Other (expense) income (477) (672) (1,873) (584) Net loss $(4,911) $(6,214) $(7,731) $(5,263) Net loss per share attributable to common stockholders—basic and diluted $(206.30) $(440.52) $(790.85) $(105.57) Weighted-average shares—basic and diluted 58,517 59,788 71,639 83,157 (1) Research and development expenses for three months ended September 30, 2016 included the $5.0 million upfront payment related to the UCB LicenseAgreement. F-31Table of ContentsEXHIBIT INDEX Exhibit No. Description 3.1 Amended and Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s CurrentReport on Form 8-K (File No. 001-37708), as filed with the SEC on March 8, 2016). 3.2 Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K(File No. 001-37708), as filed with the SEC on March 8, 2016). 4.1 Specimen Common Stock Certificate of the Company (incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement onForm S-1/A (File No. 333-208861), as filed with the SEC on February 20, 2016). 4.2 Form of Warrant to purchase Common Stock issued pursuant to the Warrant Agreement by and between the Company and Bayer Schering PharmaAG, dated as of March 26, 2007 (incorporated herein by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1 (FileNo. 333-208861), as filed with the SEC on January 4, 2016).10.1 Warrant Agreement by and between the company and Bayer Schering Pharma AG, dated as of March 26, 2007 (incorporated herein by reference toExhibit 10.2 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.2* 2007 Stock Plan (incorporated herein by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), asfiled with the SEC on January 4, 2016).10.3* 2007 Stock Plan Amendment, dated as of March 8, 2013 (incorporated herein by reference to Exhibit 10.4 to the Company’s RegistrationStatement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.4* 2007 Stock Plan Amendment, dated as of July 10, 2013 (incorporated herein by reference to Exhibit 10.5 to the Company’s Registration Statementon Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.5* 2007 Stock Plan Amendment, dated as of January 23, 2014 (incorporated herein by reference to Exhibit 10.6 to the Company’s RegistrationStatement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.6* 2007 Stock Plan Amendment, dated as of December 17, 2014 (incorporated herein by reference to Exhibit 10.7 to the Company’s RegistrationStatement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.7* 2007 Stock Plan Amendment, dated as of May 28, 2015 (incorporated herein by reference to Exhibit 10.8 to the Company’s Registration Statementon Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.8* 2007 Stock Plan Amendment, dated as of August 20, 2015 (incorporated herein by reference to Exhibit 10.9 to the Company’s RegistrationStatement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.9* Form of Incentive Stock Option Agreement under 2007 Stock Plan (incorporated herein by reference to Exhibit 10.10 to the Company’sRegistration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.10* Form of Non-Statutory Stock Option Agreement under 2007 Stock Plan (incorporated herein by reference to Exhibit 10.11 to the Company’sRegistration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).Table of ContentsExhibit No. Description10.11* 2015 Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-8 (File No.333-210412), as filed with the SEC on March 25, 2016).10.12* Form of Incentive Stock Option Agreement under 2015 Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.13 to theCompany’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.13* Form of Non-Qualified Option Agreement under 2015 Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.14 to theCompany’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.14* 2015 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 4.16 to the Company’s Registration Statement on Form S-8 (FileNo. 333-210412), as filed with the SEC on March 25, 2016).10.15* Executive Employment Agreement by and between the company and Briggs W. Morrison, M.D., dated as of September 30, 2015 (incorporatedherein by reference to Exhibit 10.16 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC onJanuary 4, 2016).10.16* Executive Employment Agreement by and between the company and Michael A. Metzger, dated as of September 30, 2015 (incorporated herein byreference to Exhibit 10.17 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4,2016).10.17* Executive Employment Agreement by and between the Company and Michael L. Meyers, M.D., Ph.D., dated as of October 1, 2015 (incorporatedherein by reference to Exhibit 10.18 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC onJanuary 4, 2016).10.18* Form of Indemnification Agreement by and between the company and each of its directors and officers (incorporated herein by reference toExhibit 10.21 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.19† License, Development and Commercialization Agreement by and between the company and Bayer Schering Pharma AG, dated as of March 26,2007 (incorporated herein by reference to Exhibit 10.22 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed withthe SEC on January 4, 2016).10.20† First Amendment to the License, Development and Commercialization Agreement by and between the company and Bayer Pharma AG, dated asof October 13, 2012 (incorporated herein by reference to Exhibit 10.23 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.21 Second Amendment to the License, Development and Commercialization Agreement by and between the company and Bayer Pharma AG, datedas of February 1, 2013 (incorporated herein by reference to Exhibit 10.24 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.22† Third Amendment to the License, Development and Commercialization Agreement by and between the company and Bayer Pharma AG, dated asof October 9, 2013 (incorporated herein by reference to Exhibit 10.25 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.23† Letter Agreement by and between the company and Bayer Pharma AG, dated as of September 18, 2014 (incorporated herein by reference toExhibit 10.26 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).Table of ContentsExhibit No. Description10.24† Clinical Trial Agreement by and between the company and Eastern Cooperative Oncology Group, dated as of March 14, 2014 (incorporated hereinby reference to Exhibit 10.27 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4,2016).10.25† Amendment No. 1 to Clinical Trial Agreement by and between the company and ECOG-ACRIN Cancer Research Group, dated as of January 30,2015 (incorporated herein by reference to Exhibit 10.28 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed withthe SEC on January 4, 2016).10.26† Amendment No. 2 to Clinical Trial Agreement by and between the company and ECOG-ACRIN Cancer Research Group, dated as of July 31, 2015(incorporated herein by reference to Exhibit 10.37 to the Company’s Registration Statement on Form S-1/A (File No. 333-208861), as filed withthe SEC on February 22, 2016).10.27† Amendment No. 3 to Clinical Trial Agreement by and between the Company and ECOG-ACRIN Cancer Research Group, dated as of April 20,2016 (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, as filed with the SEC on August 15,2016).10.28† Amendment No. 4 to Clinical Trial Agreement by and between the Company and ECOG-ACRIN Cancer Research Group, dated as of April 20,2016 (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, as filed with the SEC on August 15,2016).10.29† Amendment No. 5 to Clinical Trial Agreement by and between the Company and ECOG-ACRIN Cancer Research Group, dated as of April 20,2016 (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, as filed with the SEC on August 15,2016).10.30† Amendment No. 6 to Clinical Trial Agreement by and between the Company and ECOG-ACRIN Cancer Research Group, dated as of April 25,2016 (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, as filed with the SEC on August 15,2016).10.32 Loan and Security Agreement by and among the company, Solar Capital Ltd. and the Lenders listed therein, dated as of June 13, 2014(incorporated herein by reference to Exhibit 10.29 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with theSEC on January 4, 2016).10.33 First Amendment to Loan and Security Agreement by and among the company, Solar Capital Ltd. and the Lenders listed therein, dated as ofSeptember 25, 2014 (incorporated herein by reference to Exhibit 10.30 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.34 Second Amendment to Loan and Security Agreement by and among the company, Solar Capital Ltd. and the Lenders listed therein, dated as ofDecember 31, 2014 (incorporated herein by reference to Exhibit 10.31 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.35† Clinical Trial Collaboration and Supply Agreement by and between the company and MSD International GmbH, dated as of March 27, 2015(incorporated herein by reference to Exhibit 10.32 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with theSEC on January 4, 2016).10.36† First Amendment to Clinical Trial Collaboration and Supply Agreement by and between the company and MSD International GmbH, dated as ofAugust 13, 2015 (incorporated herein by reference to Exhibit 10.38 to the Company’s Registration Statement on Form S-1/A (File No. 333-208861), as filed with the SEC on February 22, 2016).Table of ContentsExhibit No. Description10.37† License, Development and Commercialization Agreement by and between the company and Kyowa Hakko Kirin Co., Ltd., dated December 19,2014 (incorporated herein by reference to Exhibit 10.33 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed withthe SEC on January 4, 2016).10.38† Side Letter by and between the company and Kyowa Hakko Kirin Co., Ltd., dated December 19, 2014 (incorporated herein by reference to Exhibit10.34 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4, 2016).10.39† Amendment #1 to License, Development and Commercialization Agreement by and between the company and Kyowa Hakko Kirin Co., Ltd.,dated September 18, 2015 (incorporated herein by reference to Exhibit 10.39 to the Company’s Registration Statement on Form S-1/A (File No.333-208861), as filed with the SEC on February 22, 2016).10.40† Combination Study Collaboration Agreement by and between the company and Genentech, Inc. dated August 24, 2015 (incorporated herein byreference to Exhibit 10.35 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with the SEC on January 4,2016).10.41† Clinical Trial Collaboration and Supply Agreement by and between the company, Pfizer Inc. and Ares Trading S.A., dated as of December 31,2015 (incorporated herein by reference to Exhibit 10.36 to the Company’s Registration Statement on Form S-1/A (File No. 333-208861), as filedwith the SEC on January 11, 2016).10.42† License Agreement by and between the Company and UCB Biopharma Sprl, dated as of July 1, 2016 (incorporated herein by reference to Exhibit10.1 to the Company’s Current Report on Form 8-K (File No. 001- 37708), as filed with the SEC on October 7, 2016).10.43 Third Amended and Restated Investors’ Rights Agreement by and among the company and the parties thereto, dated as of August 21, 2015(incorporated herein by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (File No. 333-208861), as filed with theSEC on January 4, 2016).21.1 Subsidiaries of the Registrant (incorporated herein by reference to Exhibit 21.1 to the Company’s Registration Statement on Form S-1 (File No.333-208861), as filed with the SEC on January 4, 2016).23.1 Consent of Independent Registered Public Accounting Firm24.1 Power of Attorney (included on the signature page to this report).31.1 Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.31.2 Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.32.1+ Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(b) or 15d-14(b) of the Exchange Act and 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.101.INS XBRL Instance Document.101.SCH XBRL Taxonomy Extension Schema Document.101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.101.DEF XBRL Taxonomy Extension Definition Linkbase Document101.LAB XBRL Taxonomy Extension Label Linkbase Document.101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.Table of Contents *Indicates a management contract or compensatory plan.+Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), andshall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.†Confidential treatment has been granted for certain portions of this exhibit. These portions have been omitted and filed separately with the SEC.EXHIBIT 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in Registration Statement No. 333-210412 on Form S-8 of our report dated March 14, 2017, relating to thefinancial statements of Syndax Pharmaceuticals, Inc. and its subsidiaries appearing in this Annual Report on Form 10-K of Syndax Pharmaceuticals, Inc. for theyear ended December 31, 2016./s/ Deloitte & Touche LLPBoston, MassachusettsMarch 14, 2017Exhibit 31.1CERTIFICATIONSI, Briggs W. Morrison, M.D., certify that:1. I have reviewed this Annual Report on Form 10-K of Syndax Pharmaceuticals, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.Date: March 14, 2017 By: /s/ Briggs W. Morrison, M.D. Briggs W. Morrison, M.D.Chief Executive Officer(Principal Executive Officer)Exhibit 31.2CERTIFICATIONSI, Richard P. Shea, certify that:1. I have reviewed this Annual Report on Form 10-K of Syndax Pharmaceuticals, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.Date: March 14, 2017 By: /s/ Richard P. Shea Richard P. SheaChief Financial Officer(Principal Financial Officer and Principal AccountingOfficer)Exhibit 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of Syndax Pharmaceuticals, Inc. (the “Company”) for the year ended December 31, 2016, as filed withthe Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company hereby certifies, pursuant to 18 U.S.C.Section 1350, that to his or her knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Date: March 14, 2017 By /s/ Briggs W. Morrison, M.D. Briggs W. Morrison, M.D.Chief Executive OfficerDate: March 14, 2017By /s/ Richard P. Shea Richard P. SheaChief Financial Officer

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