10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-37813

SYROS PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		45-3772460
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

35 CambridgePark Drive, 4th Floor Cambridge, Massachusetts		02140
(Address of Principal Executive Offices)		(Zip Code)

(617) 744-1340

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.001 par value	SYRS	Nasdaq Global Select Market

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant 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 such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Number of shares of the registrant’s common stock, $0.001 par value, outstanding on November 10, 2022: 20,225,921

TABLE OF CONTENTS


	Page
Part I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)	5

Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	5
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021	6
Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021	7
Condensed Consolidated Statements of Stockholder’s Equity for the Three and Nine Months Ended September 30, 2022 and 2021	8
Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended September 30, 2022 and 2021	10
Notes to Condensed Consolidated Financial Statements	11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3. Quantitative and Qualitative Disclosures About Market Risk	45

Item 4. Controls and Procedures	45

Part II – OTHER INFORMATION

Item 1A. Risk Factors	47

Item 6. Exhibits	50

Signatures	52

Cautionary Note Regarding Forward-Looking Statements and Industry Data

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward‑looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management and expected market growth are forward‑looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would” and similar expressions are intended to identify forward‑looking statements, although not all forward‑looking statements contain these identifying words. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. The forward‑looking statements and opinions contained in this Quarterly Report are based upon information available to us as of the date of this Quarterly Report and, while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.

These forward‑looking statements include, among other things, statements about:

•

our plans to initiate and expand clinical trials of our product candidates and our expectations for the timing, quantity and quality of information to be reported from our clinical trials of tamibarotene, SY-2101 and SY‑5609;

•

our planned clinical trials for our product candidates, whether conducted by us or by any collaborators, including the timing of these trials and of the anticipated results;

•

our ability to discover and develop compounds suitable for clinical development and the timing for designation of future development candidates;

•

our ability to replicate in any clinical trial of one of our product candidates the results we observed in preclinical or earlier clinical studies of such product candidate;

•

our plans to research, develop, seek approval for, manufacture and commercialize our current and future product candidates;

•

our plans to develop and seek approval of companion diagnostic tests for use in identifying patients who may benefit from treatment with our products and product candidates;

•

our expectations regarding the potential benefits of our gene control platform and our approach;

•

our ability to enter into, and the terms and timing of, any collaborations, license agreements, or other arrangements;

•

our ability to successfully integrate Tyme Therapeutics, Inc., or Tyme, and realize the anticipated benefits of the acquisition of Tyme, which was completed in September 2022;

•

whether a drug candidate will be nominated to enter investigational new drug application-enabling studies under our sickle cell disease collaboration with Global Blood Therapeutics, Inc., or GBT, whether GBT will exercise its option to exclusively license intellectual property arising from the collaboration, whether and when any option exercise fees, milestone payments or royalties under the collaboration agreement with GBT will ever be paid, and whether we exercise our U.S. co-promotion option under the GBT agreement;

•

whether our target discovery collaboration with Incyte Corporation, or Incyte, will yield any validated targets, whether Incyte will exercise any of its options to exclusively license intellectual property directed to such targets, and whether and when any of the target validation fees, option exercise fees, milestone payments or royalties under the Incyte collaboration will ever be paid;

•

the potential benefits of any collaboration;

•

developments relating to our competitors and our industry;

•

the impact of government laws and regulations;

•

the timing of and our ability to file new drug applications and obtain and maintain regulatory approvals for our product candidates;

•

the rate and degree of market acceptance and clinical utility of any products for which we receive marketing approval;

•

our commercialization, marketing and manufacturing capabilities and strategy;

•

our intellectual property position and strategy;

•

our ability to identify additional products or product candidates with significant commercial potential;

•

our expectations related to the use of our current cash, cash equivalents and marketable securities and the period of time in which such capital will be sufficient to fund our planned operations; and

•

our estimates regarding expenses, future revenue, capital requirements and need for additional financing.

We may not actually achieve the plans, intentions or expectations disclosed in our forward‑looking statements, and you should not place undue reliance on our forward‑looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward‑looking statements we make. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward‑looking statements contained in this Quarterly Report.

We have included important factors in the cautionary statements included in this Quarterly Report, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. In particular, the extent to which the COVID-19 pandemic continues to impact our operations and those of the third parties on which we rely will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the pandemic, additional or modified government actions, and the actions that may be required to contain the coronavirus or treat its impact. COVID-19 has and may continue to adversely impact our operations and workforce, including our discovery research, supply chain and clinical trial operations activities, which in turn could have an adverse impact on our business and financial results.

Our forward‑looking statements also do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments that we may make or enter into.

This report also includes statistical and other industry and market data that we obtained from industry publications and research, surveys, and studies conducted by third parties as well as our own estimates. All of the market data used in this report involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such data. Industry publications and third-party research, surveys, and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Our estimates of the potential market opportunities for our drug candidates include several key assumptions based on our industry knowledge, industry publications, third-party research, and other surveys, which may be based on a small sample size and may fail to accurately reflect market opportunities. While we believe that our internal assumptions are reasonable, no independent source has verified such assumptions.

You should read this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward‑looking statements, whether as a result of new information, future events or otherwise, except as required by law.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)


	September 30,			December 31,
	2022			2021
Assets
Current assets:
Cash and cash equivalents	$	171,532		$	92,302
Marketable securities		72,949			38,067
Contract assets		1,771			2,979
Prepaid expenses and other current assets		6,053			3,237
Total current assets		252,305			136,585
Property and equipment, net		12,062			12,844
Marketable securities – noncurrent		—			13,038
Other long-term assets		3,667			2,941
Restricted cash		3,086			3,086
Right-of-use asset – operating lease		13,464			14,104
Right-of-use assets – financing leases		141			337
Total assets	$	284,725		$	182,935
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	13,017		$	3,692
Accrued expenses		21,713			15,624
Deferred revenue		1,625			10,181
Financing lease obligations, current portion		137			291
Operating lease obligation, current portion		1,932			1,720
Total current liabilities		38,424			31,508
Financing lease obligations, net of current portion		3			65
Operating lease obligation, net of current portion		21,385			22,858
Warrant liability		55,228			3,029
Debt, net of debt discount, long term		40,514			40,257
Commitments and contingencies (See Note 9)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized at September 30, 2022 and December 31, 2021; 0 shares issued and outstanding at September 30, 2022 and December 31, 2021		—			—
Common stock, $0.001 par value; 70,000,000 and 20,000,000 shares authorized at September 30, 2022 and December 31, 2021, respectively; 20,225,352 and 6,202,404 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		20			6
Additional paid-in capital		682,836			548,870
Accumulated other comprehensive loss		(226	)		(79	)
Accumulated deficit		(553,459	)		(463,579	)
Total stockholders’ equity		129,171			85,218
Total liabilities and stockholders’ equity	$	284,725		$	182,935

See accompanying notes to unaudited condensed consolidated financial statements.

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021


Revenue	$	3,891		$	5,697		$	15,634		$	15,686
Operating expenses:
Research and development		25,759			27,262			84,030			73,077
General and administrative		8,076			5,346			21,970			16,606
Transaction related expenses		9,510			—			9,510			—
Total operating expenses		43,345			32,608			115,510			89,683
Loss from operations		(39,454	)		(26,911	)		(99,876	)		(73,997	)
Interest income		392			32			539			56
Interest expense		(1,051	)		(984	)		(3,008	)		(2,921	)
Change in fair value of warrant liability		9,860			1,836			12,465			14,117
Net loss applicable to common stockholders	$	(30,253	)	$	(26,027	)	$	(89,880	)	$	(62,745	)
Net loss per share applicable to common stockholders - basic and diluted	$	(3.21	)	$	(4.14	)	$	(11.93	)	$	(10.06	)
Weighted-average number of common shares used in net loss per share applicable to common stockholders - basic and diluted		9,417,069			6,292,830			7,536,149			6,239,482

See accompanying notes to unaudited condensed consolidated financial statements.

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Net loss	$	(30,253	)	$	(26,027	)	$	(89,880	)	$	(62,745	)
Other comprehensive gain (loss):
Unrealized holding gain (loss) on marketable securities		87			14			(147	)		(5	)
Comprehensive loss	$	(30,166	)	$	(26,013	)	$	(90,027	)	$	(62,750	)

See accompanying notes to unaudited condensed consolidated financial statements.

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

For the nine months ended September 30, 2022 and 2021

(in thousands, except share data)

(unaudited)


	Common Stock								Accumulated
						Additional			Other
	Number of			Par		Paid-In			Comprehensive			Accumulated			Stockholders’
	Shares			Value		Capital			Gain (Loss)			Deficit			Equity
Balance at December 31, 2020		5,622,274		$	5	$	467,569		$	—		$	(377,021	)	$	90,553
Exercise of stock options		2,013			—		157			—			—			157
Vesting of restricted stock units		26,701			—		—			—			—			—
Issuance of shares under Employee Stock Purchase Plan		3,305			—		153			—			—			153
Stock-based compensation expense		—			—		7,479			—			—			7,479
Issuance of common stock at-the-market, net of issuance costs of $5,132		540,000			1		70,467			—			—			70,468
Other comprehensive loss		—			—		—			(5	)		—			(5	)
Net loss		—			—		—			—			(62,745	)		(62,745	)
Balance at September 30, 2021		6,194,293		$	6	$	545,825		$	(5	)	$	(439,766	)	$	106,060

Balance at December 31, 2021		6,202,403		$	6	$	548,870		$	(79	)	$	(463,579	)	$	85,218
Exercise of stock options		3,770			—		1			—			—			1
Vesting of restricted stock units		83,569			1		—			—			—			1
Issuance of shares under Employee Stock Purchase Plan		13,293			—		108			—			—			108
Stock-based compensation expense		—			—		8,507			—			—			8,507
Issuance of shares in private placement, net of issuance cost of $5,068		6,387,173			6		60,106			—			—			60,112
Issuance of shares in merger, net of issuance cost of $3,136		7,546,014			7		65,325			—			—			65,332
Redemption of fractional shares due to reverse stock split		(10,870	)		—		(81	)		—			—			(81	)
Other comprehensive loss		—			—		—			(147	)		—			(147	)
Net loss		—			—		—			—			(89,880	)		(89,880	)
Balance at September 30, 2022		20,225,352		$	20	$	682,836		$	(226	)	$	(553,459	)	$	129,171

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

For the three months ended September 30, 2022 and 2021

(in thousands, except share data)

(unaudited)


	Common Stock						Accumulated
					Additional		Other
	Number of		Par		Paid-In		Comprehensive			Accumulated			Stockholders’
	Shares		Value		Capital		Gain (Loss)			Deficit			Equity
Balance at June 30, 2021		6,192,025	$	6	$	543,729	$	(19	)	$	(413,739	)	$	129,977
Vesting of restricted stock units		2,268		—		—		—			—			—
Stock-based compensation expense		—		—		2,096		—			—			2,096
Other comprehensive gain		—		—		—		14			—			14
Net loss		—		—		—		—			(26,027	)		(26,027	)
Balance at September 30, 2021		6,194,293	$	6	$	545,825	$	(5	)	$	(439,766	)	$	106,060

Balance at June 30, 2022		6,298,898	$	7	$	554,531	$	(313	)	$	(523,206	)	$	31,019
Vesting of restricted stock units		4,137		—