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 June 30, 2023


☐	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 August 4, 2023: 20,710,046

TABLE OF CONTENTS


	Page
Part I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)	5

Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	5
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022	6
Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2023 and 2022	7
Condensed Consolidated Statements of Stockholder’s Equity for the Three and Six Months Ended June 30, 2023 and 2022	8
Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2023 and 2022	10
Notes to Condensed Consolidated Financial Statements	11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3. Quantitative and Qualitative Disclosures About Market Risk	43

Item 4. Controls and Procedures	43

Part II – OTHER INFORMATION

Item 1A. Risk Factors	44

Item 6. Exhibits	47

Signatures	49

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

•

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;

•

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

•

general economic conditions, including inflation, recession risk and increasing interest rates.

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 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 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)


	June 30,			December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	115,442		$	167,467
Marketable securities		28,540			34,837
Unbilled receivable		1,756			1,694
Prepaid expenses and other current assets		6,892			7,394
Total current assets		152,630			211,392
Property and equipment, net		10,299			11,353
Other long-term assets		2,229			5,348
Restricted cash		3,086			3,086
Right-of-use asset – operating lease		12,731			13,231
Right-of-use assets – financing leases		7			76
Total assets	$	180,982		$	244,486
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	6,693		$	6,411
Accrued expenses		17,328			17,966
Deferred revenue, current portion		2,185			4,330
Financing lease obligations, current portion		8			65
Operating lease obligation, current portion		2,161			2,006
Total current liabilities		28,375			30,778
Operating lease obligation, net of current portion		19,726			20,851
Warrant liabilities		18,712			24,472
Debt, net of debt discount, long term		40,930			40,649
Commitments and contingencies (See Note 10)
Stockholders' equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized at June 30, 2023 and December 31, 2022; 0 shares issued and outstanding at June 30, 2023 and December 31, 2022		—			—
Common stock, $0.001 par value; 70,000,000 and 70,000,000 shares authorized at June 30, 2023 and December 31, 2022, respectively; 20,708,356 and 20,263,116 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		20			20
Additional paid-in capital		691,450			685,847
Accumulated other comprehensive income		49			102
Accumulated deficit		(618,280	)		(558,233	)
Total stockholders' equity		73,239			127,736
Total liabilities and stockholders' equity	$	180,982		$	244,486

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						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenue	$	2,833		$	6,276		$	5,787		$	11,743
Operating expenses:
Research and development		29,608			33,100			58,369			58,271
General and administrative		7,225			6,945			14,630			13,894
Total operating expenses		36,833			40,045			72,999			72,165
Loss from operations		(34,000	)		(33,769	)		(67,212	)		(60,422	)
Interest income		2,125			112			3,900			147
Interest expense		(1,278	)		(981	)		(2,495	)		(1,956	)
Change in fair value of warrant liabilities		(3,105	)		157			5,760			2,604
Net loss applicable to common stockholders	$	(36,258	)	$	(34,481	)	$	(60,047	)	$	(59,627	)
Net loss per share applicable to common stockholders - basic and diluted	$	(1.30	)	$	(5.40	)	$	(2.15	)	$	(9.40	)
Weighted-average number of common shares used in net loss per share applicable to common stockholders - basic and diluted		27,913,448			6,382,378			27,878,030			6,344,191

See accompanying notes to unaudited condensed consolidated financial statements.

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Net loss	$	(36,258	)	$	(34,481	)	$	(60,047	)	$	(59,627	)
Other comprehensive loss:
Unrealized holding loss on marketable securities, net of tax		(214	)		(40	)		(53	)		(234	)
Comprehensive loss	$	(36,472	)	$	(34,521	)	$	(60,100	)	$	(59,861	)

See accompanying notes to unaudited condensed consolidated financial statements.

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the three months ended June 30, 2023 and 2022

(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 March 31, 2022		6,280,129	$	6	$	551,734	$	(273	)	$	(488,725	)	$	62,742
Vesting of restricted stock units		5,478		—		—		—			—			—
Issuance of shares under Employee Stock Purchase Plan		13,293		—		109		—			—			109
Stock-based compensation expense		—		—		2,689		—			—			2,689
Other comprehensive loss		—		—		—		(40	)		—			(40	)
Net loss		—		—		—		—			(34,481	)		(34,481	)
Balance at June 30, 2022		6,298,900	$	6	$	554,532	$	(313	)	$	(523,206	)	$	31,019

Balance at March 31, 2023		20,409,130	$	20	$	688,492	$	263		$	(582,022	)	$	106,753
Vesting of restricted stock units and issuance of restricted stock awards		33,304		—		—		—			—			—
Exercise of prefunded warrants		211,840		—		—		—			—			—
Issuance of shares under Employee Stock Purchase Plan		54,082		—		144		—			—			144
Stock-based compensation expense		—		—		2,814		—			—			2,814
Other comprehensive loss		—		—		—		(214	)		—			(214	)
Net loss		—		—		—		—			(36,258	)		(36,258	)
Balance at June 30, 2023		20,708,356	$	20	$	691,450	$	49		$	(618,280	)	$	73,239

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the six months ended June 30, 2023 and 2022

(in thousands, except share data)

(unaudited)


	Common Stock						Accumulated
					Additional		Other
	Number of		Par		Paid-In		Comprehensive			Accumulated			Stockholders’
	Shares		Value		Capital		Income (Loss)			Deficit			Equity
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		79,434		—		—		—			—			—
Issuance of shares under Employee Stock Purchase Plan		13,293		—		109		—			—			109
Stock-based compensation expense		—		—		5,552		—			—			5,552
Other comprehensive loss		—		—		—		(234	)		—			(234	)
Net loss		—		—		—		—			(59,627	)		(59,627	)
Balance at June 30, 2022		6,298,900	$	6	$	554,532	$	(313	)	$	(523,206	)	$	31,019

Balance at December 31, 2022		20,263,116		20		685,847		102			(558,233	)		127,736
Vesting of restricted stock units		144,327		—		—		—			—			—
Exercise of prefunded warrants		246,831				—		—			—			—
Issuance of shares under Employee Stock Purchase Plan		54,082		—		144		—			—			144
Stock-based compensation expense		—		—		5,459		—			—			5,459
Other comprehensive loss		—		—		—		(53	)		—			(53	)
Net loss								—			(60,047	)		(60,047	)
Balance at June 30, 2023		20,708,356		20		691,450		49			(618,280	)		73,239

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six Months Ended
	June 30,
	2023			2022
Operating activities
Net loss	$	(60,047	)	$	(59,627	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,288			1,342
Non-cash lease expense		69			131
Stock-based compensation expense		5,459			5,552
Change in fair value of warrant liabilities		(5,760	)