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Edited Transcript of SYRS earnings conference call or presentation 1-Aug-19 12:30pm GMT

Q2 2019 Syros Pharmaceuticals Inc Earnings Call

CAMBRIDGE Aug 3, 2019 (Thomson StreetEvents) -- Edited Transcript of Syros Pharmaceuticals Inc earnings conference call or presentation Thursday, August 1, 2019 at 12:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* David A. Roth

Syros Pharmaceuticals, Inc. - Chief Medical Officer

* Eric R. Olson

Syros Pharmaceuticals, Inc. - Chief Scientific Officer

* Joseph J. Ferra

Syros Pharmaceuticals, Inc. - CFO

* Nancy A. Simonian

Syros Pharmaceuticals, Inc. - President, CEO & Director

* Naomi Aoki

Syros Pharmaceuticals, Inc. - VP of Corporate Communications & IR

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Conference Call Participants

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* Edward Andrew Tenthoff

Piper Jaffray Companies, Research Division - MD & Senior Research Analyst

* Jason Nicholas Butler

JMP Securities LLC, Research Division - MD and Senior Research Analyst

* Matthew Cornell Biegler

Oppenheimer & Co. Inc., Research Division - Associate

* Philip M. Nadeau

Cowen and Company, LLC, Research Division - MD and Senior Research Analyst

* Zegbeh Claudel Jallah

Roth Capital Partners, LLC, Research Division - Director and Research Analyst

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Presentation

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Operator [1]

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Good morning, and welcome to Syros Pharmaceuticals' Second Quarter 2019 Financial Results Conference Call. (Operator Instructions). This call is being webcast live on the Investor & 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 up for your questions.

At this time, I'd like to turn the call over to Naomi Aoki, Vice President of Corporate Communications and Investor Relations at Syros.

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Naomi Aoki, Syros Pharmaceuticals, Inc. - VP of Corporate Communications & IR [2]

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Thank you. This morning, we issued a press release with our second quarter 2019 financial results along with anticipated future milestones and recent accomplishments. This release is available on the Investors & 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, our quarterly report on Form 10-Q that we filed this morning 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.

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Nancy A. Simonian, Syros Pharmaceuticals, Inc. - President, CEO & Director [3]

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Thanks, Naomi, and good morning, everyone. Thank you for joining us today as we review our progress over the second quarter of 2019.

At Syros, our vision is to build a great and enduring company that delivers transformative medicines for patients with severe diseases that have largely eluded other approaches. The foundation for achieving that vision is our leading gene control platform, which allows us to elucidate regulatory regions of the genome to home in on which genes to control, in which cells, for which patients and how best to modulate the expression of those genes to maximize the chances of providing a profound benefit for patients.

Because gene expression is fundamental to the function of all cells, our platform has the potential to create medicines across a range of diseases, fueling a sustainable pipeline over the long term to support our evolution into a fully integrated biopharmaceutical company.

We continue to make significant progress toward that vision. Today, we have 2 clinical-stage programs and ongoing clinical trials in 6 cancer population, multiple programs in preclinical and discovery research for cancer and monogenic diseases and an experienced leadership team that has collectively brought more than a dozen drugs to market.

We are focused on 3 strategic priorities: advancing our clinical-stage programs to key data readouts this year and next, building on our leadership in CDK7 inhibition and growing our pipeline through ongoing investment in our discovery-stage efforts.

Over the past quarter, we made progress on our ongoing clinical trials for 1425 and 1365 with the aim of announcing proof-of-concept data in 2020 that could support fast-to-market strategies in 3 distinct AML and ovarian cancer patient population.

Once the graveyard for drug development, the AML landscape is now rapidly evolving. Despite these advances, AML and MDS patients continue to face significant unmet medical needs. Having evaluated the current and evolving treatment landscape, we believe the highest unmet need exists in the relapsed or refractory AML study, and this population provides the most efficient path to bring 1425 to market for patients.

While patients are starting to benefit from new treatments in the front line unfit setting, we are not curing the disease. Patients continue to progress, and overall survival remains particularly poor for relapsed or refractory patients.

Overall, in this heterogeneous disease of the elderly, there continues to be a significant need for well-tolerated novel therapies that provide clinical benefit.

We are excited to announce that we have started enrolling patients in a new cohort in our Phase II trial evaluating 1425 in combination with azacitidine in relapsed or refractory AML patients who are positive for our biomarkers of RARA pathway activation.

Based on the data we reported last year at ASH, we believe 1425 plus azacitidine is an active combination with a favorable tolerability profile, and we look forward to reporting potential proof-of-concept data from the relapsed or refractory cohort in 2020.

Turning to the cohorts in newly diagnosed unfit AML patients who are not suitable candidates for standard chemotherapy. As of this week, we have enrolled 20 of the planned 25 patients in the biomarker-positive cohort and expect to complete enrollment in the second half of the year. We plan to report updated data in the fourth quarter from both the biomarker-positive and biomarker-negative cohorts in newly diagnosed unfit patients. These updated data should provide additional insights into the safety, clinical activity and tolerability of the 1425 azacitidine combination to support our overall development strategy in biomarker-positive patients.

Turning now to our CDK7 franchise. Since the inception of the company, we have been focused on selective CDK7 inhibition, which we believe represents a potentially transformative, targeted approach for difficult-to-treat cancers.

Today, our CDK7 franchise includes 2 distinct molecules: 1365, our first-in-class selective CDK7 inhibitor currently in a Phase I trial; and 5609, our highly selective and potent oral CDK7 inhibitor that is expected to enter clinical development early next year.

As we have discussed before, we expect initial data from the expansion portion of the Phase I trial for 1365 in the fourth quarter, followed next year by potential proof-of-concept data from our single agent cohorts in ovarian clear cell cancer patients and in heavily pretreated, high-grade serous ovarian cancer patients.

Specifically in the fourth quarter, we expect initial safety and efficacy assessments from the cohort evaluating 1365 as a single agent in heavily pretreated, high-grade serous ovarian cancer patients who have had 3 or more prior lines of therapy. Initial safety and PK data from the cohort evaluating 1365 in combination with carboplatinum in high-grade serous ovarian cancer patients who have had one or more prior lines of therapy and initial safety, efficacy and mechanistic data from the cohort evaluating 1365 as a single agent in patients with advanced solid tumors that are accessible for biopsy.

In 2020, we expect to have updated data from these cohorts as well as initial data from the cohort of 1365 in combination with fulvestrant in metastatic HR-positive breast cancer patients who are resistant to CDK4/6 inhibitors.

Given the high unmet need in the ovarian cancer patient population, where we are pursuing single agent development, we believe there are opportunities for accelerated development for 1365.

We are proud of the work we have done to advance our CDK7 franchise to where it is today. In May, our work was highlighted in AACR's Journal, Cancer Research, which detailed our discovery of 1365 and highlighted its promise as a potentially transformative targeted approach for a range of difficult-to-treat cancers.

This external validation underscores our leadership in CDK7 inhibition as a novel approach for treating patients whose needs are not adequately addressed by existing therapies. It is this unrelenting commitment to delivering on our promise of CDK7 inhibition that fuels our ongoing efforts for 5609, which builds on our leadership from 1365.

5609 is a distinct chemical entity from 1365. It is an orally available, highly selective and potent non-covalent inhibitor of CDK7 with robust antitumor activity in multiple preclinical cancer models. We expect to present new preclinical data on 5609 in the fourth quarter, which we believe will provide further insight into the PK, PD and antitumor activity of 5609 in preclinical PDX models of several solid tumors.

We remain on track to complete IND-enabling studies in 2019 and expect to initiate a Phase I oncology trial in early 2020.

In addition to these important clinical developments, we were happy to welcome Dr. Alice Shaw to our Board of Directors this quarter. Dr. Shaw is the Director of the Center for Thoracic Cancers at the Massachusetts General Hospital and a Professor of Medicine at Harvard Medical School. She is a highly respected oncologist and a leader in translational medicine and the development of targeted cancer therapies. Her expertise will be invaluable as we continue to advance our pipeline and we look forward to her contributions.

In closing, this is an exciting time for Syros. We are approaching important data readouts that we believe has the potential to validate our fundamental approach to drug development, and more broadly, catalyze change in the treatment landscape for cancer patients with high unmet medical needs.

By 2020, it is our hope that we will be one step closer to achieving our ultimate goal of delivering targeted therapies that provide a benefit for patients in dire need of better treatment options. We look forward to keeping you updated on our progress.

With that, I'll turn it over to Joe Ferra to review our financial results for the quarter.

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Joseph J. Ferra, Syros Pharmaceuticals, Inc. - CFO [4]

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Thank you, Nancy. Over the past quarter, Syros has maintained a strong financial position, reinforced by the $70 million financing we closed in April. Based on our current plans, we believe that our existing cash, cash equivalents and marketable securities will support our operating expenses and capital requirements to the end of the first quarter of 2021 beyond multiple expected data milestones for our clinical programs while also continuing to invest in our gene control platform.

We ended the second quarter with $121.7 million in cash, cash equivalents and marketable securities compared with $99.7 million on December 31, 2018. We recognized $0.5 million of revenue in the second quarter of 2019 compared to $0.4 million for the second quarter in 2018. Revenue in both periods was earned entirely from our collaboration with Incyte.

R&D expenses were $15.5 million for the second 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 our preclinical programs, including the advancement of 5609 into IND-enabling studies.

G&A expenses were $5.2 million for the second quarter of 2019 compared to $3.8 million for the same period in 2018. This increase was primarily due to an increase in employee-related expenses.

Finally, we reported a net loss for the second quarter of $19.5 million or $0.47 per share compared to a net loss of $14 million or $0.43 per share for the same period in 2018.

With that, I will turn the call over to the operator for questions. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Phil Nadeau with Cowen and Company.

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Philip M. Nadeau, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [2]

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Congrats on the progress. Just a couple on the upcoming data releases. First, on 1365, I was curious if you'd help set expectations for that data. What would you think would be encouraging to see from 1365 as a single agent and in combination in Phase I?

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Nancy A. Simonian, Syros Pharmaceuticals, Inc. - President, CEO & Director [3]

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Thanks for the question. As we said, we're going to be presenting initial data from some of the cohorts in the fourth quarter and then expect to have more robust data across all of the cohorts, including potential proof-of-concepts in the single agent relapsed ovarian cancer cohorts in 2020.

I think for -- ultimately, for the proof-of-concept readouts, we -- as you know, in the relapsed ovarian cancer populations, both the clear cell and the high-grade serous ovarian cancer populations, the current standard of care in terms of activity are really poor, very low response rates. So we think that really seeing something better than what standard of care would be in those settings has the opportunity in this patient population that is very sick.

In terms of the early data on the combination, I mean, one of the important questions there is, can we safely combine 1365 with other agents in those settings.

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Philip M. Nadeau, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [4]

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Great. Okay, that's helpful. And then second, on 1425, you mentioned some data from the newly diagnosed cohort in the fourth quarter. Given that 20 or 25 patients are enrolled today, approximately how many would be evaluable for that Q4 data release?

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Nancy A. Simonian, Syros Pharmaceuticals, Inc. - President, CEO & Director [5]

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We haven't been explicit about the number of patients that we have, but we're -- the fact that we have 20 patients enrolled already, I think you can expect, compared to the data we presented before, to have many more patients, greater durability and ideally being able to present further data to help to validate the combination of 1425 with azacitidine, which the early data really supported a highly active combination. And I think the other really important thing will be the tolerability profile, because the early data suggested that we were not seeing increased oral toxicity and no increased neutropenia. So that combination of really validating this as an active combination in the study.

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Operator [6]

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Our next question comes from Ted Tenthoff with Piper Jaffray.

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Edward Andrew Tenthoff, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [7]

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Quick question, if I may, on the CDK7. So -- and then it may be a little early to sort of get into detail, but maybe you can provide some preliminary thoughts. Tell us sort of how you intend to develop these compounds together? I mean, I can imagine or envision the short-route indications where IV may combine or play better, and there's others where oral may make more sense. I really like that you guys are doubling down on this target. Can you kind of give us some preliminary thoughts on how you see the 2 being developed and where one might be better than the other?

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Nancy A. Simonian, Syros Pharmaceuticals, Inc. - President, CEO & Director [8]

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Thanks for the question. As you know, we -- as Joe said, we are really excited about the potential for CDK7 inhibition. And therefore, we've been moving the oral molecule along. I'm really excited about that program.

We're in the process of really evaluating based on the preclinical data where we think the optimal places to develop 5609 and also as we are developing 1365. So that's all kind of in the process of really evaluating. The 5609 is a distinct molecule. While they're both selective CDK7 inhibitors, so really analyzing the data and where we think both commercially unmet need, but also biologically makes the most sense to develop it.

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Edward Andrew Tenthoff, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [9]

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Okay, yes. I'm just thinking we could IV and oral. So thank you very much.

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Operator [10]

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(Operator Instructions) Our next question comes from Jason Butler with JMP Securities.

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Jason Nicholas Butler, JMP Securities LLC, Research Division - MD and Senior Research Analyst [11]

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Congrats on the progress. Just one on the relapsed/refractory AML cohort. Is there a 100% overlap of the sites versus the frontline cohort? Are you looking to add additional sites for this new cohort?

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David A. Roth, Syros Pharmaceuticals, Inc. - Chief Medical Officer [12]

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Thanks for the question...

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Nancy A. Simonian, Syros Pharmaceuticals, Inc. - President, CEO & Director [13]

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This is David Roth.

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David A. Roth, Syros Pharmaceuticals, Inc. - Chief Medical Officer [14]

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Yes, this is David. Yes. So the relapsed/refractory AML cohort, obviously, is focused on combining SY-1425 plus azacitidine, and we're currently operating in the same backdrop of clinical investigation sites. And the study is ongoing, actively enrolling, both in the United States as well as in Europe.

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Jason Nicholas Butler, JMP Securities LLC, Research Division - MD and Senior Research Analyst [15]

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Great. And then for 5609, can you just point us to how we should think about the preclinical PK/PD data and how that might translate -- that profile might translate into human?

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Eric R. Olson, Syros Pharmaceuticals, Inc. - Chief Scientific Officer [16]

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Yes. This is Eric Olson. Yes, we've been profiling, well, 1365 and 5609 extensively in preclinical models, evaluating the PK/PD efficacy relationship. As you know, for 1365, a covalent molecule, there's a disconnect between PK and PD, given the covalent nature. So 5609 being noncovalent is a more standard analysis of PK/PD and efficacy. So we look at things like Cmin, AUC, Cmax, all the different potential parameters that could be driving efficacy in the preclinical models and then translate that into the clinical paradigm.

Of course, understanding PD effects of the molecule, we were using our platform and understanding the regulation of genes to also make a translation of what we see in the tumors in the animals, and then we'll be measuring those in the clinic.

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Operator [17]

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Our next question comes from Mark Breidenbach with Oppenheimer.

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Matthew Cornell Biegler, Oppenheimer & Co. Inc., Research Division - Associate [18]

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This is Matt on for Mark. Congrats on the progress. I just had a quick question on the anticipated data from 1365 in 4Q. So in the past, you guys have talked about the possibility of using like a biomarker-focused strategy based on RB status, and I'm just wondering if you're planning on parsing out the data from the expansion cohort by RB status or maybe some other biomarker that might be used going forward.

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Nancy A. Simonian, Syros Pharmaceuticals, Inc. - President, CEO & Director [19]

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Thanks, Matt. I'm going to ask David to answer that question.

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David A. Roth, Syros Pharmaceuticals, Inc. - Chief Medical Officer [20]

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Yes. Thanks. So we had previously described associations between RB pathway abnormalities and associated abnormalities in the cell cycle regulation as we relate to sensitivity to our drug in preclinical models. And we are evaluating all of that in our clinical trial, both by targeting tissue and looking at things like circulating tumor DNA. And obviously, we're going to make some efforts to understand the impact of that in patients and how the drug performs. We haven't yet specifically indicated with that specificity what would be available in the fourth quarter for reporting however.

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Operator [21]

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And our next question comes from Zegbeh Jallah with Roth Capital Partners.

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Zegbeh Claudel Jallah, Roth Capital Partners, LLC, Research Division - Director and Research Analyst [22]

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I'm kind of glad to see that enrollment for 1425 in newly diagnosed AML patients is on track. I'm sure that's the feed in itself. But Nancy or David, I was just wondering, from the readout in 4Q '19, would you be able to provide some guidance on the regulatory pathway part? Or will you wait for initial results in the relapsed/refractory AML cohort before going south? And I have a follow-up.

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Nancy A. Simonian, Syros Pharmaceuticals, Inc. - President, CEO & Director [23]

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Thanks, Zegbeh. Thanks so much for your question. As you know, earlier this year, we announced that, and as we were thinking about the development of 1425 in combination with azacitidine and reviewing the overall competitive landscape and thinking about what would be the most efficient path to bring that combination to market, we have decided to kind of focus on the relapsed/refractory or basically second line and beyond AML, where despite multiple new therapies available, both in the front-line and the relapsed, the overall survival there remains very poor, less than 6 months. So we believe that there's a very high unmet medical need. There's a need for new therapies with the different mechanism of action also that can -- are very well tolerated. I mean so we think the 1425-azacitidine combination data really supports a focus there.

We also know that there's a precedence for a more -- an efficient path from the regulatory standpoint to bring drugs in that setting to market. We think that 1425 has the opportunity in really all lines of therapy, including in the newly diagnosed. So we continue to pursue the cohorts in the newly diagnosed. And as we get further data here and we look at the broader landscape, we'll determine kind of the best path forward in the newly diagnosed.

But the key for us right now is to generate proof-of-concept data, which we expect to have in 2020 in the relapsed/refractory cohort, and then that data from there would serve as the basis for considering an accelerated path.

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Zegbeh Claudel Jallah, Roth Capital Partners, LLC, Research Division - Director and Research Analyst [24]

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And then just a quick follow-up here. Without any data for azacitidine, looking at biomarker-positive patients, what are your thoughts there regarding, do you expect to see azacitidine perform like it has in the past with a broader patient population? Or do you expect the responses to be slightly different in this biomarker-positive patient just in terms of looking forward as a control arm.

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Nancy A. Simonian, Syros Pharmaceuticals, Inc. - President, CEO & Director [25]

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I'm going to ask David to answer that question.

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David A. Roth, Syros Pharmaceuticals, Inc. - Chief Medical Officer [26]

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Yes. And just with respect to biomarker-positive versus biomarker-negative, we have reported last year at ASH that we had observed a high response rate with the majority of patients, all responding quite swiftly right after just 28 days of treatment. And when benchmarking those results to the biomarker-negative enrolled patients, we saw that the results appear distinct in the sense that it has a known response rate in the mid-teens to mid-20% range and the majority or at least half the patients should be responding by about 4 months.

So we think that there's a consistency of responses, even in our own hands, to single-agent aza that we've demonstrated a distinction from with our biomarker-positive cohort. And then in terms of the relapsed population, aza as a single agent has an approximate 15% response rate with relatively short duration. And so we're anticipating that we'll be able to differentiate a combination effect in that population.

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Operator [27]

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And I'm showing no further questions. At this time, I would like to turn the call back to Ms. Nancy Simonian for any closing remarks.

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Nancy A. Simonian, Syros Pharmaceuticals, Inc. - President, CEO & Director [28]

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Thank you, operator, and thank you all for joining us today and for your continued support of Syros. Have a great day.

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Operator [29]

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Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may all disconnect. Everyone, have a great day.