syrs-10q_20210930.htm

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, 2021

☐	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, 4^th 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 October 31, 2021: 61,947,150

TABLE OF CONTENTS

	Page
Part I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)	5

Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	5
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020	6
Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020	7
Condensed Consolidated Statements of Stockholder’s Equity for the Three and Nine Months Ended September 30, 2021 and 2020	8
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	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	45

Item 4. Controls and Procedures	45

Part II – OTHER INFORMATION

Item 1A. Risk Factors	46

Item 6. Exhibits	50

Signatures	51

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;

•

planned clinical trials for our product candidates, whether conducted by us or by any future 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;

•

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 future 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 and cash equivalents 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 virus or treat its impact. The COVID-19 pandemic 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,
	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	115,420		$	173,984
Marketable securities		30,164			—
Accounts receivable		—			7
Contract assets		3,632			2,324
Prepaid expenses and other current assets		4,055			2,242
Total current assets		153,271			178,557
Property and equipment, net		13,458			14,213
Marketable securities - noncurrent		21,117			—
Other long-term assets		2,410			1,966
Restricted cash		3,086			3,086
Right-of-use asset – operating lease		14,299			14,831
Right-of-use assets – financing leases		402			597
Total assets	$	208,043		$	213,250
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	4,108		$	3,603
Accrued expenses		11,839			11,084
Deferred revenue, current portion		11,995			12,209
Financing lease obligations, current portion		285			265
Operating lease obligation, current portion		1,653			1,463
Total current liabilities		29,880			28,624
Deferred revenue, net of current portion		2,980			9,877
Financing lease obligations, net of current portion		140			356
Operating lease obligation, net of current portion		23,317			24,578
Warrant liability		5,594			19,711
Debt, net of debt discount, long term		40,072			39,551
Commitments and contingencies (See Note 9)
Stockholders' equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized at September 30, 2021 and December 31, 2020; 0 shares issued and outstanding at September 30, 2021 and December 31, 2020		—			—
Common stock, $0.001 par value; 200,000,000 shares authorized at September 30, 2021 and December 31, 2020; 61,942,950 and 56,222,746 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		61			56
Additional paid-in capital		545,770			467,518
Accumulated other comprehensive loss		(5	)		—
Accumulated deficit		(439,766	)		(377,021	)
Total stockholders' equity		106,060			90,553
Total liabilities and stockholders' equity	$	208,043		$	213,250

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,
	2021			2020			2021			2020


Revenue	$	5,697		$	3,828		$	15,686		$	9,394
Operating expenses:
Research and development		27,262			17,674			73,077			47,039
General and administrative		5,346			5,151			16,606			15,433
Total operating expenses		32,608			22,825			89,683			62,472
Loss from operations		(26,911	)		(18,997	)		(73,997	)		(53,078	)
Interest income		32			4			56			421
Interest expense		(984	)		(493	)		(2,921	)		(1,251	)
Change in fair value of warrant liability		1,836			—			14,117			—
Net loss applicable to common stockholders	$	(26,027	)	$	(19,486	)	$	(62,745	)	$	(53,908	)
Net loss per share applicable to common stockholders - basic and diluted	$	(0.41	)	$	(0.43	)	$	(1.01	)	$	(1.19	)
Weighted-average number of common shares used in net loss per share applicable to common stockholders - basic and diluted		62,928,299			45,781,638			62,394,819			45,137,331

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,
	2021			2020			2021			2020
Net loss	$	(26,027	)	$	(19,486	)	$	(62,745	)	$	(53,908	)
Other comprehensive gain (loss):
Unrealized holding gain (loss) on marketable securities		14			—			(5	)		(24	)
Comprehensive loss	$	(26,013	)	$	(19,486	)	$	(62,750	)	$	(53,932	)

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, 2021 and 2020

(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, 2019		43,367,801	$	43	$	372,100	$	24		$	(292,983	)	$	79,184
Exercise of stock options		95,647		—		509		—			—			509
Vesting of restricted stock units		105,912		—		—		—			—			—
Issuance of shares under Employee Stock Purchase Plan		36,708		—		223		—			—			223
Stock-based compensation expense		—		—		7,909		—			—			7,909
Issuance of common stock at-the-market, net of issuance costs of $411		2,201,810		2		11,917		—			—			11,919
Issuance of warrants		—		—		128		—			—			128
Other comprehensive loss		—		—		—		(24	)		—			(24	)
Net loss		—		—		—		—			(53,908	)		(53,908	)
Balance at September 30, 2020		45,807,878	$	45	$	392,786	$	—		$	(346,891	)	$	45,940

Balance at December 31, 2020		56,222,746	$	56	$	467,518	$	—		$	(377,021	)	$	90,553
Exercise of stock options		20,134		—		157		—			—			157
Vesting of restricted stock units		267,012		—		—		—			—			—
Issuance of shares under Employee Stock Purchase Plan		33,058		—		153		—			—			153
Stock-based compensation expense		—		—		7,479		—			—			7,479
Issuance of common stock in underwritten public offering, net of issuance costs of $5,132		5,400,000		5		70,463		—			—			70,468
Other comprehensive loss		—		—		—		(5	)		—			(5	)
Net loss		—		—		—		—			(62,745	)		(62,745	)
Balance at September 30, 2021		61,942,950	$	61	$	545,770	$	(5	)	$	(439,766	)	$	106,060

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

For the three months ended September 30, 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, 2020		45,758,881	$	45	$	389,766	$	—		$	(327,405	)	$	62,406
Exercise of stock options		46,547		—		297		—			—			297
Vesting of restricted stock units		2,450		—		—		—			—			—
Stock-based compensation expense		—		—		2,723		—			—			2,723
Net loss		—		—		—		—			(19,486	)		(19,486	)
Balance at September 30, 2020		45,807,878	$	45	$	392,786	$	—		$	(346,891	)	$	45,940

Balance at June 30, 2021		61,920,250	$	61	$	543,674	$	(19	)	$	(413,739	)	$	129,977
Vesting of restricted stock units		22,700		—		—		—			—			—
Stock-based compensation expense		—		—		2,096		—			—			2,096
Other comprehensive gain		—		—		—		14			—			14
Net loss		—		—		—		—			(26,027	)		(26,027	)
Balance at September 30, 2021		61,942,950	$	61	$	545,770	$	(5	)	$	(439,766	)	$	106,060

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended
	September 30,
	2021			2020
Operating activities
Net loss	$	(62,745	)	$	(53,908	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,050			2,071
Amortization of right-of-use asset		195			196
Stock-based compensation expense		7,479			7,909
Change in fair value of warrant liability		(14,117	)		—
Net amortization of premiums and discounts on marketable securities		122			(49	)
Amortization of debt-discount and accretion of deferred debt costs		521			196
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(1,813	)		(576	)
Accounts receivable		7			19,998
Contract assets		(1,308	)		(2,152	)
Other long-term assets		(694	)		(461	)
Accounts payable		334			104
Accrued expenses		1,048			70
Deferred revenue		(7,111