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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, 2020

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)

(617744-1340

(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, 2020: 45,810,735

 

 

 


 

TABLE OF CONTENTS

 

 

Page

Part I – FINANCIAL INFORMATION

 

 

Item 1.    Financial Statements (unaudited)

5

 

 

Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019

5

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019

6

Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2020 and 2019

7

Condensed Consolidated Statements of Stockholder’s Equity for the Three and Nine Months Ended September 30, 2020 and 2019

8

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019

10

Notes to Condensed Consolidated Financial Statements

11

 

 

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

28

 

 

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

38

 

 

Item 4.    Controls and Procedures

39

 

 

Part II – OTHER INFORMATION

 

 

Item 1A. Risk Factors

40

 

 

Item 6.    Exhibits

43

 

 

Signatures

44

 

2


 

Cautionary Note Regarding Forward-Looking Statements

 

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 SY‑1425 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;

3


 

 

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 outbreak 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 outbreak, additional or modified government actions, and the actions that may be required to contain the virus 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. 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,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

93,133

 

 

$

41,441

 

Marketable securities

 

 

 

 

 

49,975

 

Accounts receivable

 

 

2

 

 

 

20,000

 

Contract assets

 

 

2,310

 

 

 

158

 

Prepaid expenses and other current assets

 

 

3,118

 

 

 

2,649

 

Restricted cash, current portion

 

 

 

 

 

290

 

Total current assets

 

 

98,563

 

 

 

114,513

 

Property and equipment, net

 

 

15,020

 

 

 

15,210

 

Other long-term assets

 

 

1,011

 

 

 

490

 

Restricted cash, net of current portion

 

 

3,086

 

 

 

3,086

 

Right-of-use asset – operating lease

 

 

14,992

 

 

 

15,821

 

Right-of-use assets – financing leases

 

 

663

 

 

 

858

 

Total assets

 

$

133,335

 

 

$

149,978

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,940

 

 

$

5,853

 

Accrued expenses

 

 

10,285

 

 

 

10,646

 

Deferred revenue, current portion

 

 

11,177

 

 

 

5,739

 

Financing lease obligations, current portion

 

 

259

 

 

 

241

 

Operating lease obligation, current portion

 

 

1,402

 

 

 

1,037

 

Total current liabilities

 

 

28,063

 

 

 

23,516

 

Deferred revenue, net of current portion

 

 

14,218

 

 

 

22,639

 

Financing lease obligations, net of current portion

 

 

425

 

 

 

621

 

Operating lease obligation, net of current portion

 

 

24,970

 

 

 

24,018

 

Debt, net of debt discount, long term

 

 

19,719

 

 

 

 

Commitments and contingencies (See Note 9)

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized at September 30, 2020 and December 31, 2019; 0 shares issued and outstanding at September 30, 2020 and December 31, 2019

 

 

 

 

 

 

Common stock, $0.001 par value; 200,000,000 shares authorized at September 30, 2020 and December 31, 2019; 45,807,878 and 43,367,801 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

 

 

45

 

 

 

43

 

Additional paid-in capital

 

 

392,786

 

 

 

372,100

 

Accumulated other comprehensive gain

 

 

 

 

 

24

 

Accumulated deficit

 

 

(346,891

)

 

 

(292,983

)

Total stockholders' equity

 

 

45,940

 

 

 

79,184

 

Total liabilities and stockholders' equity

 

$

133,335

 

 

$

149,978

 

 

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,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

$

3,828

 

 

$

558

 

 

$

9,394

 

 

$

1,474

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

17,674

 

 

 

15,931

 

 

 

47,039

 

 

 

43,968

 

General and administrative

 

 

5,151

 

 

 

5,016

 

 

 

15,433

 

 

 

15,077

 

Total operating expenses

 

 

22,825

 

 

 

20,947

 

 

 

62,472

 

 

 

59,045

 

Loss from operations

 

 

(18,997

)

 

 

(20,389

)

 

 

(53,078

)

 

 

(57,571

)

Other (expense) income, net

 

 

(489

)

 

 

596

 

 

 

(830

)

 

 

1,862

 

Net loss applicable to common stockholders

 

$

(19,486

)

 

$

(19,793

)

 

$

(53,908

)

 

$

(55,709

)

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

 

$

(0.43

)

 

$

(0.47

)

 

$

(1.19

)

 

$

(1.42

)

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

 

 

45,781,638

 

 

 

42,439,338

 

 

 

45,137,331

 

 

 

39,324,751

 

 

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,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net loss

 

$

(19,486

)

 

$

(19,793

)

 

$

(53,908

)

 

$

(55,709

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gain (loss) on marketable securities

 

 

 

 

 

17

 

 

 

(24

)

 

 

24

 

Comprehensive loss

 

$

(19,486

)

 

$

(19,776

)

 

$

(53,932

)

 

$

(55,685

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

7


 

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

For the nine months ended September 30, 2020 and 2019

(in thousands, except share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Series A Convertible Preferred Stock

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

Number of

 

 

Par

 

 

Number of

 

 

Par

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

 

Shares

 

 

Value

 

 

Shares

 

 

Value

 

 

Capital

 

 

(Loss) Gain

 

 

Deficit

 

 

Equity

 

 

Balance at December 31, 2018

 

 

33,765,864

 

 

$

34

 

 

 

 

 

$

 

 

$

296,100

 

 

$

(3

)

 

$

(217,545

)

 

$

78,586

 

 

Exercise of stock options

 

 

7,780

 

 

 

 

 

 

 

 

 

 

 

 

51

 

 

 

 

 

 

 

 

 

51

 

 

Issuance of common stock and accompanying warrants in underwritten public offering, net of issuance costs of $4,600

 

 

8,667,333

 

 

 

9

 

 

 

 

 

 

 

 

 

60,350

 

 

 

 

 

 

 

 

 

60,359

 

 

Issuance of preferred stock and accompanying warrants in underwritten public offering, net of issuance costs of $400

 

 

 

 

 

 

 

 

666

 

 

 

 

 

 

4,638

 

 

 

 

 

 

 

 

 

4,638

 

 

Exercise of warrants

 

 

250

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,623

 

 

 

 

 

 

 

 

 

6,623

 

 

Other comprehensive gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24

 

 

 

 

 

 

24

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(55,709

)

 

 

(55,709

)

 

Balance at September 30, 2019

 

 

42,441,227

 

 

$

43

 

 

 

666

 

 

$

 

 

$

367,764

 

 

$

21

 

 

$

(273,254

)

 

$

94,574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

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

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,909

 

 

 

 

 

 

 

 

 

7,909

 

 

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

 

 

 

8


 

SYROS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

For the three months ended September 30, 2020 and 2019

(in thousands, except share data)

(unaudited)

 

 

 

Common Stock

 

 

Series A Preferred Stock

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

Number of

 

 

Par

 

 

Number of

 

 

Par

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

 

Shares

 

 

Value

 

 

Shares

 

 

Value

 

 

Capital

 

 

(Loss) Gain

 

 

Deficit

 

 

Equity

 

 

Balance at June 30, 2019

 

 

42,435,497

 

 

$

43

 

 

 

666

 

 

$

 

 

$

365,329

 

 

$

4

 

 

$

(253,461

)

 

$

111,915

 

 

Exercise of stock options

 

 

5,480

 

 

 

 

 

 

 

 

 

 

 

 

45

 

 

 

 

 

 

 

 

 

45

 

 

Exercise of warrants

 

 

250

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,388

 

 

 

 

 

 

 

 

 

2,388

 

 

Other comprehensive gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17

 

 

 

 

 

 

17

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,793

)

 

 

(19,793

)

 

Balance at September 30, 2019

 

 

42,441,227

 

 

$

43

 

 

 

666

 

 

$

 

 

$

367,764

 

 

$

21

 

 

$

(273,254

)

 

$

94,574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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