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2020-06-30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
|
☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2021
OR
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Commission file number: 001-37813
SYROS PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware
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45-3772460
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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35 CambridgePark Drive, 4th
Floor
Cambridge, Massachusetts
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02140
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(Address of Principal Executive Offices)
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(Zip Code)
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(617) 744-1340
(Registrant’s Telephone Number,
Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on Which Registered
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Common Stock, $0.001 par value
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SYRS
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Nasdaq Global Select Market
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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.
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☑
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Smaller reporting company
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☑
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Emerging growth company
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☑
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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 July 31, 2021: 61,930,800
TABLE OF CONTENTS
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 our product candidates and our expectations for
the timing, quantity and quality of information to be reported from
our clinical trials of tamibarotene (formerly known as SY‑1425),
SY-2101 and SY‑5609;
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|
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•
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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;
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•
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our ability to discover and develop
compounds suitable for clinical development and the timing for
designation of future development candidates;
|
|
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•
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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;
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•
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our plans to research, develop, seek
approval for, manufacture and commercialize our current and future
product candidates;
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•
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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 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.
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)
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
160,915
|
|
|
$
|
173,984
|
|
|
Marketable securities
|
|
|
21,114
|
|
|
|
—
|
|
|
Accounts receivable
|
|
|
—
|
|
|
|
7
|
|
|
Contract assets
|
|
|
2,177
|
|
|
|
2,324
|
|
|
Prepaid expenses and other current assets
|
|
|
2,001
|
|
|
|
2,242
|
|
|
Total current assets
|
|
|
186,207
|
|
|
|
178,557
|
|
|
Property and equipment, net
|
|
|
13,784
|
|
|
|
14,213
|
|
|
Marketable securities - noncurrent
|
|
|
13,264
|
|
|
|
—
|
|
|
Other long-term assets
|
|
|
2,442
|
|
|
|
1,966
|
|
|
Restricted cash
|
|
|
3,086
|
|
|
|
3,086
|
|
|
Right-of-use asset – operating lease
|
|
|
14,484
|
|
|
|
14,831
|
|
|
Right-of-use assets – financing leases
|
|
|
467
|
|
|
|
597
|
|
|
Total assets
|
|
$
|
233,734
|
|
|
$
|
213,250
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
3,671
|
|
|
$
|
3,603
|
|
|
Accrued expenses
|
|
|
9,963
|
|
|
|
11,084
|
|
|
Deferred revenue, current portion
|
|
|
12,123
|
|
|
|
12,209
|
|
|
Financing lease obligations, current portion
|
|
|
278
|
|
|
|
265
|
|
|
Operating lease obligation, current portion
|
|
|
1,588
|
|
|
|
1,463
|
|
|
Total current liabilities
|
|
|
27,623
|
|
|
|
28,624
|
|
|
Deferred revenue, net of current portion
|
|
|
4,851
|
|
|
|
9,877
|
|
|
Financing lease obligations, net of current portion
|
|
|
214
|
|
|
|
356
|
|
|
Operating lease obligation, net of current portion
|
|
|
23,747
|
|
|
|
24,578
|
|
|
Warrant liability
|
|
|
7,430
|
|
|
|
19,711
|
|
|
Debt, net of debt discount, long term
|
|
|
39,892
|
|
|
|
39,551
|
|
|
Commitments and contingencies (See Note 9)
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value; 10,000,000 shares authorized at
June 30, 2021 and December 31, 2020; 0 shares
issued and outstanding at June 30, 2021 and
December 31, 2020
|
|
|
—
|
|
|
|
—
|
|
|
Common stock, $0.001 par value; 200,000,000 shares authorized at
June 30, 2021 and December 31, 2020; 61,920,250
and 56,222,746 shares issued and outstanding at
June 30, 2021 and December 31, 2020,
respectively
|
|
|
61
|
|
|
|
56
|
|
|
Additional paid-in capital
|
|
|
543,674
|
|
|
|
467,518
|
|
|
Accumulated other comprehensive loss
|
|
|
(19
|
)
|
|
|
—
|
|
|
Accumulated deficit
|
|
|
(413,739
|
)
|
|
|
(377,021
|
)
|
|
Total stockholders' equity
|
|
|
129,977
|
|
|
|
90,553
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
233,734
|
|
|
$
|
213,250
|
|
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
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Revenue
|
|
$
|
5,162
|
|
|
$
|
3,188
|
|
|
$
|
9,989
|
|
|
$
|
5,566
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
25,786
|
|
|
|
14,796
|
|
|
|
45,815
|
|
|
|
29,365
|
|
|
General and administrative
|
|
|
5,520
|
|
|
|
5,133
|
|
|
|
11,260
|
|
|
|
10,282
|
|
|
Total operating expenses
|
|
|
31,306
|
|
|
|
19,929
|
|
|
|
57,075
|
|
|
|
39,647
|
|
|
Loss from operations
|
|
|
(26,144
|
)
|
|
|
(16,741
|
)
|
|
|
(47,086
|
)
|
|
|
(34,081
|
)
|
|
Interest income
|
|
|
12
|
|
|
|
32
|
|
|
|
24
|
|
|
|
416
|
|
|
Interest expense
|
|
|
(969
|
)
|
|
|
(487
|
)
|
|
|
(1,937
|
)
|
|
|
(757
|
)
|
|
Change in fair value of warrant liability
|
|
|
4,611
|
|
|
|
—
|
|
|
|
12,281
|
|
|
|
—
|
|
|
Net loss applicable to common stockholders
|
|
$
|
(22,490
|
)
|
|
$
|
(17,196
|
)
|
|
$
|
(36,718
|
)
|
|
$
|
(34,422
|
)
|
|
Net loss per share applicable to common stockholders - basic and
diluted
|
|
$
|
(0.36
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(0.59
|
)
|
|
$
|
(0.77
|
)
|
|
Weighted-average number of common shares used in net loss per share
applicable to common stockholders - basic and diluted
|
|
|
62,859,500
|
|
|
|
45,699,277
|
|
|
|
62,123,658
|
|
|
|
44,811,638
|
|
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
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Net loss
|
|
$
|
(22,490
|
)
|
|
$
|
(17,196
|
)
|
|
$
|
(36,718
|
)
|
|
$
|
(34,422
|
)
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding loss on marketable securities
|
|
|
(19
|
)
|
|
|
(3
|
)
|
|
|
(19
|
)
|
|
|
(24
|
)
|
|
Comprehensive loss
|
|
$
|
(22,509
|
)
|
|
$
|
(17,199
|
)
|
|
$
|
(36,737
|
)
|
|
$
|
(34,446
|
)
|
See accompanying notes to unaudited condensed consolidated
financial statements.
7
SYROS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY
For the six months ended June 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
|
|
|
49,100
|
|
|
|
—
|
|
|
|
212
|
|
|
|
—
|
|
|
|
—
|
|
|
|
212
|
|
|
Vesting of restricted stock units
|
|
|
103,462
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Issuance of shares under Employee Stock Purchase Plan
|
|
|
36,708
|
|
|
|
—
|
|
|
|
223
|
|
|
|
—
|
|
|
|
—
|
|
|
|
223
|
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
5,186
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,186
|
|
|
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
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(34,422
|
)
|
|
|
(34,422
|
)
|
|
Balance at June 30, 2020
|
|
|
45,758,881
|
|
|
$
|
45
|
|
|
$
|
389,766
|
|
|
$
|
—
|
|
|
$
|
(327,405
|
)
|
|
$
|
62,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
244,312
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Issuance of shares under Employee Stock Purchase Plan
|
|
|
33,058
|
|
|
|
—
|
|
|
|
153
|
|
|
|
—
|
|
|
|
—
|
|
|
|
153
|
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
5,383
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,383
|
|
|
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
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(19
|
)
|
|
|
—
|
|
|
|
(19
|
)
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(36,718
|
)
|
|
|
(36,718
|
)
|
|
Balance at June 30, 2021
|
|
|
61,920,250
|
|
|
$
|
61
|
|
|
$
|
543,674
|
|
|
$
|
(19
|
)
|
|
$
|
(413,739
|
)
|
|
$
|
129,977
|
|
8
SYROS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY
For the three months ended June 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 March 31, 2020
|
|
|
45,690,718
|
|
|
$
|
45
|
|
|
$
|
386,704
|
|
|
$
|
3
|
|
|
$
|
(310,209
|
)
|
|
$
|
76,543
|
|
|
Exercise of stock options
|
|
|
18,505
|
|
|
|
—
|
|
|
|
112
|
|
|
|
—
|
|
|
|
—
|
|
|
|
112
|
|
|
Vesting of restricted stock units
|
|
|
12,950
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Issuance of shares under Employee Stock Purchase Plan
|
|
|
36,708
|
|
|
|
—
|
|
|
|
223
|
|
|
|
—
|
|
|
|
—
|
|
|
|
223
|
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
2,727
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,727
|
|
|
Other comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
(3
|
)
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(17,196
|
)
|
|
|
(17,196
|
)
|
|
Balance at June 30, 2020
|
|
|
45,758,881
|
|
|
$
|
45
|
|
|
$
|
389,766
|
|
|
$
|
-
|
|
|
$
|
(327,405
|
)
|
|
$
|
62,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2021
|
|
|
61,849,642
|
|
|
$
|
61
|
|
|
$
|
541,068
|
|
|
$
|
—
|
|
|
$
|
(391,249
|
)
|
|
$
|
149,880
|
|
|
Vesting of restricted stock units
|
|
|
37,550
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Issuance of shares under Employee Stock Purchase Plan
|
|
|
33,058
|
|
|
|
—
|
|
|
|
153
|
|
|
|
—
|
|
|
|
—
|
|
|
|
153
|
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
2,453
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,453
|
|
|
Other comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(19
|
)
|
|
|
—
|
|
|
|
(19
|
)
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(22,490
|
)
|
|
|
(22,490
|
)
|
|
Balance at June 30, 2021
|
|
|
61,920,250
|
|
|
$
|
61
|
|
|
$
|
543,674
|
|
|
$
|
(19
|
)
|
|
$
|
(413,739
|
)
|
|
$
|
129,977
|
|
9
SYROS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(36,718
|
)
|
|
$
|
(34,422
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,350
|
|
|
|
1,370
|
|
|
Amortization of right-of-use asset
|
|
|
130
|
|
|
|
130
|
|
|
Stock-based compensation expense
|
|
|
5,383
|
|
|
|
5,186
|
|
|
Change in fair value of warrant liability
|
|
|
(12,281
|
)
|
|
|
—
|
|
|
Net amortization of premiums and discounts on marketable
securities
|
|
|
20
|
|
|
|
(49
|
)
|
|
Amortization of debt-discount and accretion of deferred debt
costs
|
|
|
341
|
|
|
|
117
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
241
|
|
|
|
376
|
|
|
Accounts receivable
|
|
|
7
|
|
|
|
19,998
|
|
|
Contract assets
|
|
|
147
|
|
|
|
(1,451
|
)
|
|
Other long-term assets
|
|
|
(726
|
)
|
|
|
(378
|
)
|
|
Accounts payable
|
|
|
(6
|
)
|
|
|
(2,152
|
)
|
|
Accrued expenses
|
|
|
(861
|
)
|
|
|
(1,653
|
)
|
|
Deferred revenue
|
|
|
(5,112
|
)
|
|
|
(1,556
|
)
|
|
Proceeds for tenant improvement incentive from landlord
|
|
|
—
|
|
|
|
2,035
|
|
|
Operating lease asset and liabilities
|
|
|
(359
|
)
|
|
|
264
|
|
|
Net cash used in operating activities
|
|
|
(48,444
|
)
|
|
|
(12,185
|
)
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(690
|
)
|
|
|
(2,785
|
)
|
|
Purchases of marketable securities
|
|
|
(34,417
|
)
|
|
|
—
|
|
|
Maturities of marketable securities
|
|
|
—
|
|
|
|
50,000
|
|
|
Net cash (used in) provided by investing activities
|
|
|
(35,107
|
)
|
|
|
47,215
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
Payments on financing and capital lease obligations
|
|
|
(129
|
)
|
|
|
(118
|
)
|
|
Proceeds from issuance of common stock through employee benefit
plans
|
|
|
157
|
|
|
|
212
|
|
|
Proceeds from the issuance of common stock through employee stock
purchase plan
|
|
|
153
|
|
|
|
223
|
|
|
Proceeds from issuance of common stock through at-the-market sales
agreement, net of issuance costs
|
|
|
—
|
|
|
|
11,896
|
|
|
Proceeds from term loan, net of issuance costs
|
|
|
—
|
|
|
|
19,700
|
|
|
Proceeds from issuance of common stock in public
offering, net of issuance costs
|
|
|
70,337
|
|
|
|
—
|
|
|
Payment of issuance cost related to out of period offering
|
|
|
(36
|
)
|
|
|
—
|
|
|
Net cash provided by financing activities
|
|
|
70,482
|
|
|
|
31,913
|
|
|
Net Increase (decrease) in cash, cash equivalents and restricted
cash
|
|
|
(13,069
|
)
|
|
|
66,943
|
|
|
Cash, cash equivalents and restricted cash (See reconciliation in Note 6)
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
177,070
|
|
|
|
44,817
|
|
|
End of period
|
|
$
|
164,001
|
|
|
$
|
111,760
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
1,585
|
|
|
$
|
642
|
|
|
Cash paid for tax
|
|
$
|
—
|
|
|
$
|
7
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
Property and equipment received but unpaid as of period end
|
|
$
|
113
|
|
|
$
|
301
|
|
|
Offering costs incurred but unpaid as of period end
|
|
$
|
10
|
|
|
$
|
176
|
|
See accompanying notes to unaudited condensed consolidated
financial statements.
10
SYROS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Nature of Business
Syros Pharmaceuticals, Inc. (the "Company"), a Delaware
corporation formed in November 2011, is a biopharmaceutical
company seeking to redefine the power of small molecules to
control the expression of genes.
The Company is subject to a number of risks similar to those of
other early stage companies, including dependence on key
individuals; risks inherent in the development and
commercialization of medicines to treat human disease; competition
from other companies, many of which are larger and better
capitalized; risks relating to obtaining and maintaining necessary
intellectual property protection; and the need to obtain adequate
additional financing to fund the development of its product
candidates and discovery activities. If the Company is unable to
raise capital when needed or on favorable terms, it would be forced
to delay, reduce, eliminate or out-license certain of its research
and development programs or future commercialization rights to its
product candidates.
On January 22, 2021, the Company issued and sold an aggregate of
5,400,000 shares of its common stock in an underwritten public
offering at a public offering price of $14.00 per share, resulting
in gross proceeds of $75.6 million before deducting underwriting
discounts and commissions and other transaction expenses of
approximately $5.1 million.
The Company has incurred significant annual net operating losses in
every year since its inception. It expects to continue to incur
significant and increasing net operating losses for at least the
next several years. The Company’s net losses were $84.0 million,
$75.4 million and $62.3 million for the years ended
December 31, 2020, 2019 and 2018, respectively. As of
June 30, 2021, the Company had an accumulated deficit of
$413.7 million. The Company has not generated any revenues
from product sales, has not completed the development of any
product candidate and may never have a product candidate approved
for commercialization. The Company has financed its operations to
date primarily through the sale of equity securities, license and
collaboration agreements and term debt. The Company has devoted
substantially all of its financial resources and efforts to
research and development and general and administrative activities
to support such research and development. The Company’s net losses
may fluctuate significantly from quarter to quarter and year to
year. Net losses and negative cash flows have had, and will
continue to have, an adverse effect on the Company’s stockholders'
equity and working capital. The Company believes that its cash, cash
equivalents and marketable securities of $195.3 million as
of June 30, 2021 will
be sufficient to allow the Company to fund its current operating
plan for a period of at least 12 months past the issuance date of
these unaudited interim condensed consolidated financial
statements.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the
United States (“U.S. GAAP”). Any reference in these notes to
applicable guidance is meant to refer to the authoritative U.S.
GAAP as found in the Accounting Standards Codification (“ASC”) and
Accounting Standards Updates (“ASU”) of the Financial Accounting
Standards Board (“FASB”). Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with U.S. GAAP have been condensed or omitted from this
report, as is permitted by such rules and
regulations. Accordingly, these financial statements should be
read in conjunction with the financial statements as of and for the
year ended December 31, 2020 and notes thereto included in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2020 filed with the Securities and Exchange Commission (“SEC”)
on March 4, 2021.
The unaudited interim condensed consolidated financial statements
have been prepared on the same basis as the audited financial
statements. In the opinion of the Company’s management, the
accompanying unaudited interim condensed consolidated financial
statements contain all adjustments that are necessary to present
fairly the Company’s financial position as of
June 30, 2021, the results of its operations, statements
of cash flows and statements of stockholders’ equity for the three
and six months ended June 30, 2021 and 2020. Such adjustments
are of a normal and recurring nature. The results for the three and
six months ended June 30, 2021 are not necessarily
indicative of the results for the year ending December 31, 2021, or
for any future period.
11
Principles of Consolidation
The accompanying condensed consolidated financial statements
include the accounts of Syros Pharmaceuticals, Inc. and its
wholly owned subsidiaries, Syros Securities Corporation, a
Massachusetts corporation formed by the Company in December 2014 to
exclusively engage in buying, selling and holding securities on its
own behalf, and Syros Pharmaceuticals (Ireland) Limited, an Irish
limited liability company formed by the Company in January 2019.
All intercompany transactions and balances have been eliminated in
consolidation.
Use of Estimates
The preparation of financial statements in conformity with
U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts in the financial
statements and accompanying notes. Management considers many
factors in selecting appropriate financial accounting policies and
in developing the estimates and assumptions that are used in the
preparation of the financial statements. Management must apply
significant judgment in this process. In addition, other factors
may affect estimates, which include, but are not limited to,
expected business and operational changes, sensitivity and
volatility associated with the assumptions used in developing
estimates and whether historical trends are expected to be
representative of future trends. Management’s estimation process
may yield a range of potentially reasonable estimates and
management must select an amount that falls within that range of
reasonable estimates. On an ongoing basis, the Company’s management
evaluates its estimates, which include, but are not limited to,
estimates related to revenue recognition, warrant liability,
stock-based compensation expense, accrued expenses and income
taxes. Actual results may differ from those estimates or
assumptions. The full extent to which the COVID-19 pandemic will
directly or indirectly impact the Company’s business, results of
operations and financial condition, including expenses, reserves
and allowances, clinical trials, research and development costs and
employee-related amounts, will depend on future developments that
are highly uncertain, including as a result of new information that
may emerge concerning COVID-19 and the actions taken to contain it
or treat it.
Segment Information
Operating segments are identified as components of an enterprise
about which separate discrete financial information is available
for evaluation by the chief operating decision maker, or
decision-making group, in making decisions on how to allocate
resources and assess performance. The Company's chief operating
decision maker is the Chief Executive Officer. The Company and the
chief operating decision maker view the Company's operations and
manage its business in one operating segment. The Company operates
only in the United States.
Cash and Cash Equivalents
The Company considers all highly liquid instruments that have
original maturities of three months or less when acquired to be
cash equivalents. Cash equivalents, which generally consist of
money market funds that invest in U.S. Treasury obligations, as
well as overnight repurchase agreements and corporate debt
securities, are stated at fair value. The Company maintains its
bank accounts at one major financial institution.
Fair Value of Financial Instruments
ASC 820, Fair Value
Measurement (“ASC 820”), established a fair value hierarchy
for instruments measured at fair value that distinguishes between
assumptions based on market data (observable inputs) and the
Company’s own assumptions (unobservable inputs). Observable inputs
are those that market participants would use in pricing the asset
or liability based on market data obtained from sources independent
of the Company. Unobservable inputs are those that reflect the
Company’s assumption about the inputs that market participants
would use in pricing the asset or liability. These are developed
based on the best information available under the
circumstances.
ASC 820 identified fair value as the exchange price, or exit price,
representing the amount that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants. As a basis for considering market participant
assumptions in fair value measurements, ASC 820 established a
three-tier fair value hierarchy that distinguishes between the
following:
12
Level 1—Quoted market prices (unadjusted) in active markets
for identical assets or liabilities.
Level 2—Inputs other than quoted prices included within
Level 1 that are either directly or indirectly observable,
such as quoted market prices, interest rates and yield curves.
Level 3—Unobservable inputs developed using estimates or
assumptions developed by the Company, which reflect those that a
market participant would use.
To the extent that the valuation is based on models or inputs that
are less observable or unobservable in the market, the
determination of fair value requires more judgment. Accordingly,
the degree of judgment exercised by the Company in determining fair
value is greatest for instruments categorized as Level 3. A
financial instrument’s level within the fair value hierarchy is
based on the lowest level of any input that is significant to the
fair value measurement.
The carrying amounts reflected in the condensed consolidated
balance sheets for cash and cash equivalents, prepaid expenses,
other current assets, restricted cash, accounts payable, accrued
expenses and deferred revenue approximate their respective fair
values due to their short-term nature.
Amortization of Debt Discount and Issuance Costs
Long-term
debt is initially recorded at its
allocated proceeds, net of discounts and issuance costs. Debt
discount and issuance costs, consisting of legal fees, fair value
of the warrant at its issuance date and other issuance fees
directly related to the debt, are offset against the initial
carrying value of the debt and are amortized to interest expense
over the estimated life of the debt using the effective interest
method.
Revenue Recognition
To date the Company’s only revenue has consisted of collaboration
and license revenue. The Company has not generated any revenue from
product sales and does not expect to generate any revenue from
product sales for the foreseeable future.
The Company recognizes revenue in accordance with ASC 606, Revenue from
Contracts with Customers (“ASC 606”). ASC 606 applies to
all contracts with customers, except for contracts that are within
the scope of other standards, such as leases, insurance,
collaboration arrangements and financial instruments. Under
ASC 606, an entity recognizes revenue when its customer obtains
control of promised goods or services, in an amount that reflects
the consideration the entity expects to receive in exchange for
those goods or services. To determine revenue recognition for
arrangements that an entity determines are within the scope of ASC
606, the entity performs the following five steps:
|
|
(i)
|
identify the contract(s) with a customer;
|
|
|
(ii)
|
identify the performance obligations in the contract;
|
|
|
(iii)
|
determine the transaction price;
|
|
|
(iv)
|
allocate the transaction price to the performance obligations in
the contract; and
|
|
|
(v)
|
recognize revenue when (or as) the entity satisfies a performance
obligation.
|
The Company only applies the five-step model to contracts when it
is probable that the Company will collect the consideration it is
entitled to in exchange for the goods or services it transfers to
the customer. If a contract is determined to be within the scope of
ASC 606 at inception, the Company assesses the goods or services
promised within such contract, determines which of those goods and
services are performance obligations, and assesses whether each
promised good or service is distinct. The Company then recognizes
as revenue the amount of the transaction price that is allocated to
the respective performance obligation when (or as) the performance
obligation is satisfied.
If the Company performs by transferring goods or services to a
customer before the customer pays consideration or before payment
is due, the Company records a contract asset, excluding any amounts
presented as accounts receivable. The Company includes unbilled
accounts receivable as contract assets on its consolidated balance
sheets. The Company records accounts receivable for amounts billed
to the customer for which the Company has an unconditional right to
consideration. The Company assesses contract assets and accounts
receivable for impairment and, to date, no impairment losses have
been recorded.
13
From time to time, the Company may enter into agreements that are
within the scope of ASC 606. The terms of these arrangements
typically include payment to the Company of one or more of the
following: non-refundable, up-front license fees or prepaid
research and development services; development, regulatory and
commercial milestone payments; and royalties on net sales of
licensed products. Each of these payments results in license
and collaboration revenues, except for revenues from royalties on
net sales of licensed products, which will be classified as royalty
revenues.
The Company analyzes its collaboration arrangements to assess
whether they are within the scope of ASC 808, Collaborative Arrangements (“ASC 808”),
to determine whether such arrangements involve joint operating
activities performed by parties that are both active participants
in the activities and exposed to significant risks and rewards
dependent on the commercial success of such activities. This
assessment is performed throughout the life of the arrangement
based on changes in the responsibilities of all parties in the
arrangement. For collaboration arrangements within the scope of ASC
808 that contain multiple elements, the Company first determines
which elements of the collaboration are deemed to be within the
scope of ASC 808 and those that are more reflective of a
vendor-customer relationship and therefore within the scope of ASC
606. For elements of collaboration arrangements that are accounted
for pursuant to ASC 808, an appropriate recognition method is
determined and applied consistently, generally by analogy to ASC
606. For those elements of the arrangement that are accounted for
pursuant to ASC 606, the Company applies the five-step model
described above.
Research and Development
Expenditures relating to research and development are expensed in
the period incurred. Research and development expenses consist of
both internal and external costs associated with the development of
the Company’s gene control platform and product candidates.
Research and development costs include salaries and benefits,
materials and supplies, external research, preclinical and clinical
development expenses, stock-based compensation expense and
facilities costs. Facilities costs primarily include the allocation
of rent, utilities, depreciation and amortization.
In certain circumstances, the Company is required to make
nonrefundable advance payments to vendors for goods or services
that will be received in the future for use in research and
development activities. In such circumstances, the nonrefundable
advance payments are deferred and capitalized, even when there is
no alternative future use for the research and development, until
related goods or services are provided.
The Company records accruals for estimated ongoing research costs.
When evaluating the adequacy of the accrued liabilities, the
Company analyzes progress of the work being performed, including
the phase or completion of the event, invoices received and costs.
Significant judgements and estimates may be made in determining the
accrued balances at the end of any reporting period. Actual results
could differ from the Company’s estimates.
The Company may in-license the rights to develop and commercialize
product candidates. For each in-license transaction the Company
evaluates whether it has acquired processes or activities along
with inputs that would be sufficient to constitute a “business” as
defined under U.S. GAAP. A “business” as defined under
U.S. GAAP consists of inputs and processes applied to those
inputs that have the ability to create outputs. Although businesses
usually have outputs, outputs are not required for an integrated
set of activities to qualify as a business. When the Company
determines that it has not acquired sufficient processes or
activities to constitute a business, any up-front payments, as well
as milestone payments, are immediately expensed as acquired
research and development in the period in which they are
incurred.
Warrants
The Company accounts for issued
warrants either as a liability or equity in accordance with ASC
480-10, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity (“ASC 480-10”) or
ASC 815-40, Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a
Company’s Own Stock (“ASC
815-40”). Under ASC 480-10, warrants are considered a liability if
they are mandatorily redeemable and they require settlement in
cash, other assets, or a variable number of shares. If warrants do
not meet liability classification under ASC 480-10, the Company
considers the requirements of ASC 815-40 to determine whether the
warrants should be classified as a liability or as equity. Under
ASC 815-40, contracts that may require settlement for cash are
liabilities, regardless of the probability of the occurrence of the
triggering event. Liability-classified warrants are measured at
fair value on the issuance date and at the end of each reporting
period. Any change in the fair value of the warrants after the
issuance date is recorded in the consolidated statements of
operations as a gain or loss. If warrants do not require liability
classification under ASC 815-40, in order to conclude warrants
should be classified as equity, the Company assesses whether the
warrants are indexed to its common stock and whether the warrants
are classified as equity under ASC 815-40 or other applicable GAAP
standard. Equity-classified warrants are accounted for at fair
value on the issuance date with no changes in fair value recognized
after the issuance date.
14
Stock-Based Compensation Expense
The Company accounts for its stock-based compensation awards in
accordance with ASC 718, Compensation—Stock
Compensation (“ASC 718”). ASC 718 requires all
stock-based payments to employees and directors, including grants
of restricted stock units and stock option awards, to be recognized
as expense in the consolidated statements of operations based on
their grant date fair values. Consistent with the grants for
employees and directors, grants of restricted stock units and stock
option awards to other service providers, referred to as
non-employees, are measured based on the grant-date fair value of
the award and expensed in the Company’s condensed consolidated
statement of operations over the vesting period. The Company
estimates the fair value of stock options granted using the
Black-Scholes option-pricing model. Prior to June 30, 2016, the
Company was a private company and, therefore, lacks
Company-specific historical and implied volatility information. As
a result, the Company determines its expected volatility by using a
blend of its historical experience and a weighted average of
selected peer companies. The expected term of the Company’s stock
options has been determined utilizing the “simplified” method for
awards that qualify as “plain-vanilla” options. The expected term
of stock options to non-employees can be determined using either
the contractual term of the option award or the “simplified”
method. The risk-free interest rate is determined by reference to
the U.S. Treasury yield curve in effect at the time of grant of the
award for time periods approximately equal to the expected term of
the award. Expected dividend yield is based on the fact that the
Company has never paid cash dividends and does not expect to pay
any cash dividends in the foreseeable future. The Company uses the
value of its common stock to determine the fair value of restricted
stock units.
The Company expenses the fair value of its stock-based awards to
employees and non-employees on a straight-line basis over the
associated service period, which is generally the vesting period.
The Company accounts for forfeitures as they occur instead of
estimating forfeitures at the time of grant. Ultimately, the actual
expense recognized over the vesting period will be for only those
options that vest.
Compensation expense for discounted purchases under the employee
stock purchase plan is measured using the Black-Scholes model to
compute the fair value of the lookback provision plus the purchase
discount and is recognized as compensation expense over the
offering period.
For stock-based awards that contain performance-based milestones,
the Company records stock-based compensation expense in accordance
with the accelerated attribution model. Management evaluates when
the achievement of a performance-based milestone is probable based
on the expected satisfaction of the performance conditions as of
the reporting date. For certain performance-based awards,
notwithstanding any vesting in accordance with the achievement of
performance-based milestones, such awards vest in full on the sixth
anniversary of the vesting commencement date. Compensation expense for such awards is recognized
over the six-year
vesting period unless management determines that the achievement of
any performance-based milestones is probable, in which case expense
is accelerated.
Net Loss per Share
Basic net earnings per share applicable to common stockholders is
calculated by dividing net earnings applicable to common
stockholders by the weighted average shares outstanding during the
period, without consideration for common stock equivalents. Diluted
net earnings per share applicable to common stockholders is
calculated by adjusting the weighted average shares outstanding for
the dilutive effect of common stock equivalents outstanding for the
period, determined using the treasury-stock method and the
if-converted method. For purposes of the calculation of dilutive
net loss per share applicable to common stockholders, stock
options, unvested restricted stock units, and warrants are
considered to be common stock equivalents but are excluded from the
calculation of diluted net loss per share applicable to common
stockholders, as their effect would be anti-dilutive; therefore,
basic and diluted net loss per share applicable to common
stockholders were the same for all periods presented.
As of June 30, 2021, pre-funded warrants to purchase
1,000,000 shares of common stock that were issued in connection
with the December 2020 private placement (refer to Note 10) were
included in the basic and diluted net loss per share
calculation.
15
The following common stock equivalents were excluded from the
calculation of diluted net loss per share applicable to common
stockholders for the periods indicated because including them would
have had an anti-dilutive effect: