Syros Pharmaceuticals, Inc.
Q1 2019 Earnings Call Transcript

Published: 2 May 2019

[Operator:]

Good morning and welcome to Syros Pharmaceuticals First Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. This call is being webcast live on the Investor and Media section of Syros' website at www.syros.com. Please be advised that today's call is being recorded. Following the formal remarks, we will open the call for your question. At this time, I would like to turn the call over to Naomi Aoki, Vice President of Corporate Communications and Investor Relations at Syros.

[Naomi Aoki:]

Thank you. This morning we issued a press release with our first quarter 2019 financial results, along with anticipated future milestones and recent accomplishments. This release is available on the Investors and Media section of Syros' website at www.syros.com. We will begin the call with prepared remarks by Dr. Nancy Simonian, our Chief Executive Officer; and Joe Ferra, our Chief Financial Officer. Then we will open the call for questions. Dr. David Roth, our Chief Medical Officer; Dr. Eric Olson, our Chief Scientific Officer; and Dr. Jeremy Springhorn, our Chief Business Officer, are also on the call and will be available for Q&A. Before we begin, I would like to remind everyone that statements we make on this conference call will include forward-looking statements. Actual events or results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those set forth in the Risk Factors section of our annual report on Form 10-K and any other filings that we may make with the SEC in the future. In addition, any forward-looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements. I would now like to turn the call over to Nancy.

[Nancy Simonian:]

Thank you, Naomi, and to everyone for joining us today. 2019 has gotten off to a great start for Syros and I'm happy to share our recent progress. As we work to achieve our vision of building a great and enduring company with medicines that provide a profound benefit for patients, our strategic priorities are to

[Joe Ferra:]

Thank you, Nancy. In April, we fortified our financial position with successful financing, resulting in gross proceeds of approximately $70 million, before deducting underwriting discount and commissions and operating expenses of approximately $4.6 million. With this capital, we believe that we are sufficiently funded to support our planned operations and capital expenditures through the end of the first quarter of 2021, beyond anticipated proof-of-concept readouts for each of our three path to market opportunities, while also investing in our gene control platform. We are humbled by the continued support of our existing shareholders and excited to welcome new high-quality investors to Syros. Now for our first quarter 2019 financial results. We ended the first quarter with $75.9 million in cash, cash equivalents and marketable securities, compared with $99.7 million on December 31, 2018. This does not include the net proceeds of $65.4 million for the financing that closed in April, 2019. We recognized $0.5 million of revenue in the first quarter of 2019 compared to $0.4 million for the first quarter of 2018. Revenues in both periods were earned entirely from our collaboration with Incyte. R&D expenses were $12.6 million for the first quarter of 2019 compared to $11.1 million for the same period in 2018. This increase was primarily a result of the progress of our existing clinical trials and preclinical programs including the advancement of 5609 into IND-enabling studies. G&A expenses were $4.9 million for the first quarter of 2019 compared to $4.1 million for the same period in 2018. This increase was primarily a result of increase in employee-related expenses. Finally, we reported a net loss for the first quarter of $16.5 million, or $0.49 per share, compared to a net loss of $14.5 million or $0.48 per share for the same period in 2018. With that, I will turn the call over to operator for questions. Thank you.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Phil Nadeau of Cowen and Company. Your line is now open.

[Phil Nadeau:]

Good morning. Thanks for taking my questions. A couple on the pipeline. First on 1365, you've been pretty clear that you expect a proof-of-concept data to come next year, but we are going to get some data by the end of this year from 1365. So I'm kind of curious, what is different about the quality of data, the amount of follow-up, or the doses and what we're going to see next year versus what we get later this year? Why couldn't the data later this year be proof-of-concept for 1365?

[Nancy Simonian:]

I'm going to have David Roth answer that question. Hey, Phil.

[David Roth:]

Yes, okay. Thanks for the question. So -- yes, this is David. So our plan is to present some of the initial data in the fourth quarter of this year and then that will be followed by, what we call, PoC, or proof-of-concept data in 2020. And by that we mean, a more robust data set that would give us conviction to be moving forward into a registrational trial. So you'll see a fuller data set in 2020.

[Phil Nadeau:]

Good. And is it -- I guess, patient numbers and follow-up will be relatively short in Q4? Is that what we should -- or patient number small and follow-up relatively short?

[David Roth:]

Yes. It will be initial data, so I think that a fuller data set will likely have more information in terms of numbers and duration.

[Phil Nadeau:]

Got it. Okay. And then, on 1425, starting the new biomarker-positive relapsed refractory AML cohort in Q3. I'm curious, what has given rise to that cohort? Is that based on optimism from the newly diagnosed cohort that you're currently enrolling? Or was there some other reason that you've decided to end that cohort?

[Nancy Simonian:]

Hi, Phil. I think, as you know, we're excited about the combination synergy we saw between 1425 and azacitidine in the newly diagnosed patients, the data that we presented at ASH. And as we thought about what was the, sort of, optimal way to bring that 1425 combination as quickly as possible to market, given the overall competitive landscape and shifting landscape in the newly diagnosed treatment setting. We felt that the relapsed setting was going to be the most rapid approach to get the combination to patients. So we believe that there's strong combination synergy if we select with the biomarker, we'll be selecting for the biomarker in the relapsed population. And given the very high unmet need in that relapsed population, we believe, again, that's the most efficient path. We're still very excited about the newly diagnosed opportunity we -- with the drug -- with that updated data later this year, but based on the data we presented at ASH, seeing such a high overall response rate and CR rate, we think that that's also a really important and exciting opportunity as well.

[Phil Nadeau:]

Got it. That makes sense. And then, one last question for Joe. Joe, just qualitatively on R&D expense, appreciating that your guidance is for the cash flow into 2021. Should we just basically expect a relatively slow and gradual increase in R&D through the remainder of 2019? Or are there any points in the year where there'll be a step-up because of new expenses?

[Joe Ferra:]

Yes, yes. So you'll see a gradual increase in R&D expense and operating expenses in general as we move on and as you said, as we continue to advance the programs in clinical development that you would expect those expenses to increase. One note on that though with the cash burn in Q1, it did include some rather onetime expenses that were related to restricted -- moving some cash to restricted cash related to our move later this year and also some more seasonal items that are related to Q1 that were accrued for in prior periods. So as you noted are looking forward. A key part is that with the cash on hand as of March 31 for us the financing we did in April, we have cash until the end of the first quarter in 2021.

[Phil Nadeau:]

Perfect. Thanks for taking my question.

[Operator:]

Thank you. And our next question comes from Ted Tenthoff with Piper Jaffray. Your line is now open.

[Ted Tenthoff:]

Great. Thank you very much for the update and for the recent KOL breakfast on the CDK7 efforts. Quick question there, just with respect to the oral program. What really has to be done to prep that for advancement into the clinic early next year? And how do you sort of see using IV and oral or IV versus oral in the clinic? Thank you very much.

[Nancy Simonian:]

Thanks Ted. I'm going to have Eric answer the first part and then David the second.

[Eric Olson:]

Yes. This is Eric Olson. So the -- as you know in order to get these small molecules into the clinic, we have to go through all the series of IND-enabling studies which are preclinical studies. And we have to manufacture and release drug and then have a protocol for the clinical study. It's all supported by preclinical and CMC data.

[Nancy Simonian:]

And we -- for all those things we remain on track to complete those by the end of the year and to move into the clinic in the early part of 2020.

[David Roth:]

And then this is David here. Just in terms of the opportunities for CDK7, obviously we see a very broad opportunity given the compelling preclinical data and the significant unmet need of the populations, we're currently focused on. And there are clear opportunities where an IV may be a preferred agent in terms of the route of administration and the types of other therapies that may be combined with that and the treatment used where as an oral may nicely lend itself to more long-term therapy like in the maintenance setting. And so we think there's key opportunity for using both approaches in various treatment settings.

[Ted Tenthoff:]

Makes a lot of sense. Thank you so much.

[Operator:]

Thank you. And our next question comes from Jason Butler of JMP Securities. Your line is now open.

[Jason Butler:]

Hi, thanks for taking the questions and congrats on the progress. First one just to follow up on Ted's question on 5609, other than the obvious difference of IV and oral can you just speak to some of the data you presented at AACR and how the attributes of the two molecules that versus 1365 could differ? And second question you touched on this somewhat at the breakfast. But can you talk a little bit more about how the RB pathway alterations biomarker approach could -- how you're thinking about that both from a science perspective and logistically? Thanks.

[Nancy Simonian:]

Thanks Jason. I'm going to turn the first part of the question over to Eric on 5609.

[Eric Olson:]

Thanks for the question. So both 5609 and 1365 are highly-selective CDK7 inhibitors. And as you said there are some other features besides just being IV and oral. 1365 is a covalent inhibitor so covalently attaches to CDK7, whereas 5609 is a non-covalent molecule. The data we presented at AACR is both showing in vivo efficacy in activity in preclinical models of breast cancer and ovarian cancer both cell line xenograft models as well as patient-derived xenograft models. We also show that we induced apoptosis with 5609 in tumor cells, but not in normal cells and we also see that with SY-1365. So based on what we've seen to-date, we think much of the activity of each of those molecules in the preclinical setting is largely due to CDK7 inhibition. I think as we go further explore more in both preclinical eventually in the clinic, we expect we will see some differences that will really highlight some opportunities for each molecule.

[Nancy Simonian:]

And David will answer the question on the RB pathway.

[David Roth:]

Yes. So the RB pathway you asked about the scientific rationale and in some of the logistical issues around that and how to implement it. So obviously there are many tumor types known to have abnormalities in core RB pathway involving mutations. And also there are related cell cycle pathway genes that are also just regulated and together that defines this pathway. And there's a fairly high prevalence of them in selected tumor types. Obviously we're focusing on ovarian, because that represents one of them and HR-positive metastatic breast cancer, following progression after treatment with a CDK4/6 inhibitor and CDK4/6 inhibitor also is considered one of those. So we're looking at enriching patients with this. And then we're testing our patients for a background of having these abnormalities. We expect we'll identify a fair number given the known prevalence. And we're using fairly standard tests that are readily available to help identify these patients. So these involve sequencing, DNA sequencing. We're looking at circulating tumor DNA that you can simply obtain through a plasma, a blood tube sample. And then when tissue biopsies are available, we're looking at the tumor biopsies themselves, which also gives us an opportunity to evaluate the DNA for mutations or amplifications or RNA expression changes. So I think it's relatively straightforward to implement this, if we end up demonstrating that our preclinical data translate into the clinic as we would anticipate.

[Jason Butler:]

Okay. That’s great. Thank you for taking questions.

[David Roth:]

Thanks, Jason.

[Operator:]

Thank you. And our next question comes from Jotin Marango of ROTH Capital. Your line is now open.

[Anna Vorobyeva:]

Hi, good morning. This is Anna Vorobyeva on the line for Jotin Marango. I have two questions. So, starting with the first I'm going to follow up on Phil's question regarding 1425. So now you have this new relapsed refractory combo cohort in addition to the newly diagnosed. And so from a registrational point, do you think one path may be faster? In other words assuming both are successful could one take a faster registrational path?

[Nancy Simonian:]

Yeah. I think, I believe that just based on precedents with other agents and hurdles, we believe that the relapsed refractory cohort pathway will likely be quicker and that was one of the rationales, by which to add that. In the newly diagnosed setting with the addition of multiple new agents over the last couple of years it makes that pathway probably longer and not as straightforward. So we believe yes that the relapsed refractory pathway to registration based on historical precedents with other drugs will be likely quicker. And that was a major rationale.

[Anna Vorobyeva:]

Okay. Yeah, thank you. And my second question also regarding 1425, in AML you studied that compound extensively. Are you thinking about exploring other indications? There’s literature supporting retinoid or retinoid mediated mechanisms and inflammatory diseases? Is that possibly a potential direction? Or how are you thinking about 1425 in terms of possibly building an opportunity in inflammation? Thank you.

[Nancy Simonian:]

I think it's a great question. First of all just on the cancer side, when we made the initial discovery of the biomarker, we actually also found that to be relevant in, in vitro studies and breast cancer in vivo and in vitro. So even within the cancer space, we believe that there are other tumor types that have rather pathway activation that we could select based on the presence of the biomarker. So really right now our focus is on driving the program forward in AML, trying to get the 1425 in combination with patients as quickly as possible. We are aware of the literature and the data that go beyond cancer and inflammatory diseases if it certainly is of interest. But right now our focus is really in the cancer space and the initial cancer being AML.

[Anna Vorobyeva:]

Okay. Thank you so much and congratulations, and the breakfast was outstanding. Thanks guys.

[Nancy Simonian:]

Great. Thanks, Anna.

[Operator:]

Thank you. [Operator Instructions] And our next question comes from Mark Breidenbach of Oppenheimer. Your line is now open.

[Mark Breidenbach:]

Hey, good morning guys. Thanks for taking the questions. First, focusing on the new cohort in relapsed refractory AML. I was hoping you could give us a little more color on the patients you intend to enroll in the cohort and the size of this cohort. Is this going to be open to patients who have seen prior azacitidine therapy or even patients who have relapsed following transplants? Thanks.

[Nancy Simonian:]

I'll have David Roth answer that.

[David Roth:]

Yeah, thanks. It's a good question and the answer is the cohort is the size of 25 patients who are positive for our novel biomarker identifying patients with RARA pathway activation. And this will be open to any patients with AML who have relapsed. So, yes they could have been relapsed following transplant or they could have relapsed following treatment with an HMA in their prior past history. So will be all-inclusive.

[Mark Breidenbach:]

Got it, got it.

[David Roth:]

And part of the rationale for doing that is that we have a really compelling preclinical data that demonstrates combination synergy with 1425 and hypomethylating agents including azacitidine that show a unique mechanistic synergy with DNA damage and inducing apoptosis. So we believe that this is a different than either drug alone in supporting the potential therapeutic effects that we hope to see. And so we want to make that opportunity available to as many patients as possible.

[Mark Breidenbach:]

Okay. That's very helpful. And with regard to the expansion cohorts for 1365 in ovarian, I realized that biopsies aren't going to be available from all of these patients. I'm just wondering if we're going to have enough information to assign RB pathway status in the data that's expected later this year. Thanks.

[David Roth:]

Yeah. Again, another good one. So we first of all have a biopsy cohort, where the focus is to interrogate the patients by doing direct analysis of the tissues. And so from there we do expect to have a robust data set. But we are in all of our patients, those who do and don't have tissue biopsies of tumor, will be submitting samples for circulating tumor DNA. And we expect to get the lion's share of RB pathway abnormalities identified through that direct DNA sequencing strategy. So we hope to have great information at baseline in all the patients.

[Mark Breidenbach:]

All right. Perfect. Thanks for taking questions.

[David Roth:]

Thank you, Mark.

[Operator:]

Thank you. And ladies and gentlemen, this does conclude our question-and-answer session. I would now like to turn the call back over to Nancy Simonian for any closing remarks.

[Nancy Simonian:]

Thank you, operator and thank you all for your continued interest in Syros. We are looking ahead to the rest of 2019 into 2020 with excitement. And we look forward to keeping you updated on our progress. Have a good day.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect.