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, 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 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

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.

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.

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.

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.

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.

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

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

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		—