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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, 2023

OR

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, 2023: 21,067,071

 


 

TABLE OF CONTENTS

 

Page

Part I – FINANCIAL INFORMATION

 

 

Item 1. Financial Statements (unaudited)

5

 

 

Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022

5

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022

6

Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2023 and 2022

7

Condensed Consolidated Statements of Stockholder’s Equity for the Three and Nine Months Ended September 30, 2023 and 2022

8

Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended September 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

46

 

 

Signatures

48

 

2


 

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 tamibarotene and our expectations for the timing, quantity and quality of information to be reported from our clinical trials of tamibarotene;
our planned clinical trials for tamibarotene or for any other 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 a product candidate 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 tamibarotene or any 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 tamibarotene or any future product candidates;
our ability to enter into, and the terms and timing of, any collaborations, license agreements, or other arrangements;
our plans related to the potential to further develop SY-2101 in the future subject to additional capital availability;
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 tamibarotene or any future 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 and cash equivalents 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.

3


 

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.

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 tamibarotene or any future product candidate 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.

4


 

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,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

112,219

 

 

$

167,467

 

Marketable securities

 

 

 

 

 

34,837

 

Unbilled receivable

 

 

1,665

 

 

 

1,694

 

Prepaid expenses and other current assets

 

 

8,631

 

 

 

7,394

 

Total current assets

 

 

122,515

 

 

 

211,392

 

Property and equipment, net

 

 

7,614

 

 

 

11,353

 

Other long-term assets

 

 

2,113

 

 

 

5,348

 

Restricted cash

 

 

3,086

 

 

 

3,086

 

Right-of-use asset – operating lease

 

 

12,464

 

 

 

13,231

 

Right-of-use assets – financing leases

 

 

3

 

 

 

76

 

Total assets

 

$

147,795

 

 

$

244,486

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,855

 

 

$

6,411

 

Accrued expenses

 

 

21,489

 

 

 

17,966

 

Deferred revenue, current portion

 

 

139

 

 

 

4,330

 

Financing lease obligations, current portion

 

 

3

 

 

 

65

 

Operating lease obligation, current portion

 

 

2,241

 

 

 

2,006

 

Debt, current portion

 

 

1,667

 

 

 

 

Total current liabilities

 

 

28,394

 

 

 

30,778

 

Operating lease obligation, net of current portion

 

 

19,144

 

 

 

20,851

 

Warrant liabilities

 

 

24,549

 

 

 

24,472

 

Debt, net of debt discount, long term

 

 

39,406

 

 

 

40,649

 

Commitments and contingencies (See Note 10)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized at September 30, 2023 and December 31, 2022; 0 shares issued and outstanding at September 30, 2023 and December 31, 2022

 

 

 

 

 

 

Common stock, $0.001 par value; 70,000,000 and 70,000,000 shares authorized at September 30, 2023 and December 31, 2022, respectively; 20,720,447 and 20,263,116 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

21

 

 

 

20

 

Additional paid-in capital

 

 

694,704

 

 

 

685,847

 

Accumulated other comprehensive income

 

 

 

 

 

102

 

Accumulated deficit

 

 

(658,423

)

 

 

(558,233

)

Total stockholders' equity

 

 

36,302

 

 

 

127,736

 

Total liabilities and stockholders' equity

 

$

147,795

 

 

$

244,486

 

See accompanying notes to unaudited condensed consolidated financial statements.

5


 

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,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

$

3,762

 

 

$

3,891

 

 

$

9,550

 

 

$

15,634

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

28,280

 

 

 

25,759

 

 

 

86,650

 

 

 

84,030

 

General and administrative

 

7,764

 

 

 

8,076

 

 

 

22,394

 

 

 

21,970

 

Transaction related expenses

 

 

 

 

9,510

 

 

 

 

 

 

9,510

 

Restructuring (Note 13)

 

2,354

 

 

 

 

 

 

2,354

 

 

 

 

Total operating expenses

 

38,398

 

 

 

43,345

 

 

 

111,398

 

 

 

115,510

 

Loss from operations

 

(34,636

)

 

 

(39,454

)

 

 

(101,848

)

 

 

(99,876

)

Interest income

 

1,633

 

 

 

392

 

 

 

5,533

 

 

 

539

 

Interest expense

 

(1,303

)

 

 

(1,051

)

 

 

(3,798

)

 

 

(3,008

)

Change in fair value of warrant liabilities

 

(5,837

)

 

 

9,860

 

 

 

(77

)

 

 

12,465

 

Net loss applicable to common stockholders

$

(40,143

)

 

$

(30,253

)

 

$

(100,190

)

 

$

(89,880

)

Net loss per share applicable to common stockholders - basic and diluted

$

(1.43

)

 

$

(3.21

)

 

$

(3.59

)

 

$

(11.93

)

Weighted-average number of common shares used in net loss per share applicable to common stockholders - basic and diluted

 

27,990,558

 

 

 

9,417,069

 

 

 

27,915,951

 

 

 

7,536,149

 

See accompanying notes to unaudited condensed consolidated financial statements.

6


 

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

September 30,

 

 

 

September 30,

 

 

2023

 

 

2022

 

 

 

2023

 

 

2022

 

 

Net loss

 

$

(40,143

)

 

$

(30,253

)

 

 

$

(100,190

)

 

$

(89,880

)

 

Other comprehensive (loss) gain:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding (loss) gain on marketable securities, net of tax

 

 

(49

)

 

 

87

 

 

 

 

(102

)

 

 

(147

)

 

Comprehensive loss

 

$

(40,192

)

 

$

(30,166

)

 

 

$

(100,292

)

 

$

(90,027

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

7


 

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the three months ended September 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 June 30, 2022

 

 

6,298,898

 

 

$

7

 

 

$

554,531

 

 

$

(313

)

 

$

(523,206

)

 

$

31,019

 

Vesting of restricted stock units

 

 

4,137

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,955

 

 

 

 

 

 

 

 

 

2,955

 

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 gain

 

 

 

 

 

 

 

 

 

 

 

87

 

 

 

 

 

 

87

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,253

)

 

 

(30,253

)

Balance at September 30, 2022

 

 

20,225,352

 

 

$

20

 

 

$

682,836

 

 

$

(226

)

 

$

(553,459

)

 

$

129,171

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2023

 

 

20,708,356

 

 

$

20

 

 

$

691,450

 

 

$

49

 

 

$

(618,280

)

 

$

73,239

 

Vesting of restricted stock units

 

 

12,091

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,255

 

 

 

 

 

 

 

 

 

3,255

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(49

)

 

 

 

 

 

(49

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(40,143

)

 

 

(40,143

)

Balance at September 30, 2023

 

 

20,720,447

 

 

$

21

 

 

$

694,704

 

 

$

 

 

$

(658,423

)

 

$

36,302

 

 

 

8


 

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the nine months ended September 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

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2022

 

 

20,263,116

 

 

 

20

 

 

 

685,847

 

 

 

102

 

 

 

(558,233

)

 

 

127,736

 

Vesting of restricted stock units

 

 

132,418

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Exercise of prefunded warrants

 

 

246,831

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of restricted stock awards

 

 

24,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of shares under Employee Stock Purchase Plan

 

 

54,082

 

 

 

 

 

 

144

 

 

 

 

 

 

 

 

 

144

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

8,714

 

 

 

 

 

 

 

 

 

8,714

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(102

)

 

 

 

 

 

(102

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(100,190

)

 

 

(100,190

)

Balance at September 30, 2023

 

 

20,720,447

 

 

 

21

 

 

 

694,704

 

 

 

 

 

 

(658,423

)

 

 

36,302

 

 

9


 

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2023

 

 

2022

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(100,190

)

 

$

(89,880

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

1,900

 

 

 

2,001

 

Impairment

 

 

373

 

 

 

 

Non-cash lease expense

 

 

73

 

 

 

196

 

Transaction costs allocated to warrants issued in connection with private placement

 

 

 

 

 

5,015

 

Stock-based compensation expense

 

 

8,714

 

 

 

8,507

 

Change in fair value of warrant liabilities

 

 

77

 

 

 

(12,465

)

Net amortization of premiums and discounts on marketable securities

 

 

(1,314

)

 

 

198

 

Amortization of debt-discount and accretion of deferred debt costs

 

 

424

 

 

 

557

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

463

 

 

 

(1,466

)

Unbilled receivable

 

 

29

 

 

 

1,208

 

Other long-term assets

 

 

3,235

 

 

 

(726

)

Accounts payable

 

 

(3,556

)

 

 

323

 

Accrued expenses

 

 

3,523

 

 

 

3,727

 

Deferred revenue

 

 

(4,191

)

 

 

(8,556

)

Operating lease liabilities

 

 

(705

)

 

 

(621

)

Net cash used in operating activities

 

 

(91,145

)

 

 

(91,982

)

Investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(234

)

 

 

(567

)

Purchases of marketable securities

 

 

(50,968

)

 

 

 

Maturities of marketable securities

 

 

87,017

 

 

 

30,031

 

Net cash provided by investing activities

 

 

35,815

 

 

 

29,464

 

Financing activities

 

 

 

 

 

 

Payments on financing lease obligations

 

 

(62

)

 

 

(216

)

Proceeds from the issuance of common stock through employee stock purchase plan

 

 

144

 

 

 

109

 

Proceeds from the issuance of common stock through exercise of stock options