Syndax Pharmaceuticals, Inc. Annual Report 2016

FY2016 Annual Report · Syndax Pharmaceuticals, Inc.
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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

iTable 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.
iiTable 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.
iiiTable 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.
1Table 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
2Table 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.
3Table 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
4Table 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.
5Table 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.
6Table 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
7Table 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.

8Table 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
9Table 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
10Table 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
11Table 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
12Table 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.
13Table 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
14Table 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.
15Table 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
16Table 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
17Table 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
18Table 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.
19Table 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.
20Table 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.
21Table 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
22Table 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
23Table 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.
24Table 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.
25Table 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.
26Table 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
27Table 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
28Table 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.
29Table 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.
30Table 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
31Table 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;
32Table 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.
33Table 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.
34Table 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.
35Table 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.
36Table 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.
37Table 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.
38Table 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
39Table 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
40Table 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.
41Table 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.
42Table 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
43Table 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
44Table 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;
45Table 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;
46Table 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
47Table 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
48Table 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;
49Table 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
50Table 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.
51Table 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.
52Table 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
53Table 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,
54Table 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
55Table 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.
56Table 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
57Table 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.
58Table 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.
59Table 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;
60Table 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.
61Table 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
62Table 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,
63Table 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
64Table 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
65Table 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
66Table 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
67Table 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
68Table 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
69Table 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
70Table 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
71Table 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
72Table 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.
73Table 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
74Table 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.
75Table 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
76Table 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.
77Table 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
















78Table 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
79Table 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
80Table 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;
81Table 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
82Table 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
83Table 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
84Table 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
85Table 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.
86Table 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.
87Table 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.
88Table 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.
89Table 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.
90Table 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
91Table 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.
92Table 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.
93Table 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.
94Table 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.
95Table 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
96Table 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
97Table 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-1Table 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-2Table 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-3Table 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-4Table 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-5Table 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-6Table 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-7Table 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-8Table 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-9Table 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-10Table 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-11Table 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-12Table 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-13Table 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-14Table 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-15Table 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-16Table 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-17Table 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-18Table 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-19Table 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-20Table 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-21Table 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-22Table 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-23Table 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-24Table 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-25Table 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-26Table 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-27Table 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-28Table 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-29Table 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-30Table 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-31Table 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,
2017Exhibit 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