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Syros Pharmaceuticals, Inc. (NASDAQ:SYRS)
Q3 2019 Earnings Call
Nov 12, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good morning, ladies and gentlemen, and welcome to the Q3 2019 Syros Pharmaceuticals, Inc. earnings conference call. [Operator instructions] I would now like to turn the conference over to your host, Ms. Naomi Aoki.

Please go ahead.

Naomi Aoki -- Head, Media Relations

Thank you. This morning, we issued a press release with our third-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; Dr. David Roth, our chief medical officer; and Joe Ferra, our chief financial officer. We will then open the call for questions. Dr.

Eric Olson, our chief financial 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, 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 -- Chief Executive Officer

Thank you, Naomi. Good morning, everyone, and thank you for joining us today as we review our progress over the third quarter of 2019. Our vision at Syros is to build a great and enduring company by developing transformative gene control medicines for patients with diseases that have eluded other genomics-based approaches. To achieve that vision, we focus our people and resources where we believe we have the greatest potential to make a profound difference for patients.

In the third quarter, we made important strides toward that vision. We reported exciting new clinical data on SY-1425 in a difficult-to-treat AML population. We presented new preclinical data on SY-5609, highlighting its best-in-class potential as a highly selective and potent oral CDK7 inhibitor, and we prioritized its development over SY-1365, our IV CDK7 inhibitor, because we believe 5609 provides the best opportunity to realize the promise of selective CDK7 inhibition. Beginning with 1425, we were pleased with the clinical data we presented at the ESH conference last month.

The high complete response rates, deep CRs and favorable tolerability profile in newly diagnosed unfit AML patients strengthened our belief in the potential of 1425 to be a foundation of care for AML patients with our RARA biomarker. People with AML need new treatment options that are well tolerated and could be used in combination to extend survival and improve quality of life, and we believe there is a significant opportunity for 1425 in combination with azacitidine in both the front line and relapsed and refractory AML setting. As we continue to follow the newly diagnosed unfit AML patients enrolled in our trial to further characterize the profile of the combination, we are considering the best way to bring the 1425 azacitidine combination forward in the frontline setting. In parallel, we are pleased with our progress in rolling RARA-positive patients with relapsed or refractory AML in the trial and expect to announce potential proof-of-concept data in 2020 that we believe could support a fast-to-market strategy for 1425.

Turning to 5609. We believe that selected CDK7 inhibition is a potentially transformative targeted approach for difficult-to-treat cancers, and we were excited to share new preclinical data on 5609 at the ENA conference last month that further support our conviction in this target and molecule. These data informed our decision to prioritize 5609 and to focus our Phase I trial in patients with solid tumors, including breast, lung and ovarian cancers as well as in solid tumors of any histology with RB pathway alterations. We expect to complete IND-enabling studies this year and initiate a Phase I trial in the first quarter of 2020.

Our platform also continues to fuel a robust preclinical and discovery pipeline, which we will be highlighting in upcoming presentations at ASH and the San Antonio Breast Cancer Symposia. In an oral presentation at ASH, we will discuss our identification and validation of a novel repressor of a fetal globin gene, a discovery that will be featured in an ASH press briefing, and that stems from our broader drug discovery efforts in sickle cell disease. The poster presentation at San Antonio will share our findings from work with our collaborators at the Whitehead Institute that reveal core drivers of metastasis in triple negative breast cancer. The progress across our pipeline is a testament to the power of our platform to identify which genes to control, in which cells, for which patients and how best to modulate the expression of those genes to provide a benefit for patients.

Looking ahead to 2020 and beyond, I believe we are well positioned for success as we advance our programs to key milestones and leverage our leading platform to fuel a sustainable pipeline to support our goal of building a fully integrated biopharmaceutical company. With that, let me turn the call over to David for a more detailed review of 1425 and 5609.

David Roth -- Chief Medical Officer

Thanks, Nancy, and good morning to everybody joining us today. I'm excited to walk you through the updated data for 1425 that we presented at ESH. As Nancy mentioned, the data marked an important milestone for us as they demonstrate that our novel combination of 1425 and azacitidine induces high complete response rates, deep CRs and high rates of transfusion independence in RARA-positive AML patients with a rapid onset of action, a favorable tolerability profile and early signs of durable responses. As of an August data cut, 40 newly diagnosed unfit AML patients enrolled in our Phase III trial and contributed to the safety analysis.

Additionally, 13 RARA-positive patients and 22 RARA-negative patients were evaluable for response. In RARA-positive patients, the data showed a 62% rate IWG complete responses, including CRs and CRs with incomplete blood count recovery for CRis. The CR rate was 54%, with six of the seven CRs being deep molecular or cytogenetic CRs. By contrast, in RARA-negative patients, the CR CRi rate was 27%, which is consistent with the published response rates of 18% to 29% observed in newly diagnosed unfit AML patients treated with single-agent azacitidine.

We're particularly encouraged by the deep CRs we're seeing in RARA-positive patients with no detectable signs of molecular or cytogenetic abnormalities in their bone marrow following treatment. Importantly, these types of deep CRs are typically associated with more durable responses. And while our durability data are still maturing, we're seeing durable CRs in some of the earlier patients enrolled in the trial, with a duration of responses of up to 344 days, including three of the eight responding patients having CRs lasting beyond seven months at the time of the data cutoff. Most initial responses in RARA-positive patients were seen at the first response assessment after just 28 days on treatment.

Additionally, 82% of the RARA-positive patients achieved or maintained transfusion independence. Taken together, the speed of response, which is really important for patients with leukemia, normalization of neutrophil and platelet counts and transfusion independence are all important objective measures that contribute to clinical benefit for patients with AML. We are also encouraged to see these responses across AML risk groups, including patients with mutations that are typically associated with poor outcomes. Notably, we're not seeing an enrichment for genes that may be associated with responsiveness to azacitidine in our responding RARA-positive patients, supporting the distinct and synergistic mechanism of action of the 1425 combination in this novel-targeted AML patient population.

These new data also confirm RARA as the optimal biomarker for patient selection. Based on data from approximately 350 newly diagnosed and relapsed or refractory patients screened for our clinical trial to date, we believe that approximately 30% of AML patients are RARA-positive, representing a significant portion of the AML population. Turning to the safety analysis. The updated clinical data continue to support a favorable tolerability profile of the combination.

1425, in combination with azacitidine, was generally well tolerated with no evidence of increased toxicities beyond what is seen with 1425 or azacitidine alone. Rates of myelosuppression, including neutropenia, were comparable to reports of single-agent aza, and the majority of non-hematologic adverse events were low grade. Enrollment in the newly diagnosed cohorts is nearly complete. We plan to follow these patients to further characterize the overall profile of the combination, including safety, efficacy and durability of response while enrolling the cohort of RARA-positive relapsed/refractory patients.

We're pleased with the pace of enrollment and expect to report potential proof-of-concept data from the relapsed/refractory AML cohort next year. The strength of the data in newly diagnosed patients, gives us added confidence in the relapsed or refractory setting that the 1425 azacitidine combination is highly synergistic and well tolerated, with the potential to treat RARA-positive patients across the disease spectrum. Moving now to 5609. Last month, we announced our decision to prioritize the development of 5609 and discontinue further development of 1365.

Our rationale for this decision was based on the superior preclinical profile of 5609 and the advantages inherent to an oral molecule that we believe will allow us to realize the full promise of selective CDK7 inhibition for patients. Our experience with 1365 reinforced our conviction in CDK7 inhibition. We established a proof of mechanism and saw evidence of clinical activity and apoptosis in tumor tissues in patients treated at higher doses, including a durable PR in a highly refractory patient. As we treated more patients in the expansion portion of the trial, peri-infusional adverse events limited our ability to keep those patients at the higher doses.

Importantly, these peri-infusional AEs tracked with peak concentrations of 1365 and not CDK7 targeting inhibitions, which is why we don't expect to see the same issues with 5609. The totality of these data lead us to believe that if we can sustain higher levels of target coverage, we can deliver on the promise of selective CDK7 inhibition. As an oral molecule, 5609 provides greater flexibility in dosing and greater opportunity to sustain target coverage with better tolerability. In our preclinical studies, 5609 also outperformed 1365 on a wide range of measures, demonstrating greater selectivity, potency and antitumor activity in preclinical models in which both drug candidates were tested.

The new preclinical data on 5609 that we presented at the ENA meeting further highlight its best-of-class potential. With at least 13,000-fold greater selectivity for CDK7 over closely related members of the CDK family, 5609 demonstrated greater potency and selectivity than an oral non-covalent CDK7 inhibitor in clinical development. 5609 also demonstrated an overall PK profile that supports daily dosing and robust anti-tumor activity at doses below a maximum tolerated dose, which was seen in preclinical notes. 5609 inhibited tumor growth in 100% of the breast, lung and ovarian cancer models studied, including inducing deep and sustained regressions in 58% of these models.

Building off our prior work, these deeper and more sustained responses were associated with RB pathway alterations. Additionally, 5609 also induced robust antitumor activity in combination with fulvestrant in CDK4/6 inhibitor treatment-resistant models of ER-positive breast cancer. We expect to initiate the Phase I trial for 5609 in the first quarter of 2020, and we are committed to advancing the program as rapidly as possible. We're focusing on tumor types that we believe are most likely to respond to 5609, including breast, lung and ovarian cancers and solid tumors of any histology, harboring RB pathway alterations to increase the likelihood of seeing early signals of activity.

We've designed the trial in a way that we believe will allow us to more efficiently move through dose escalation and adapt quickly to explore early signals. We believe we have two excellent drug candidates in 1425 and 5609, and we look forward to keeping you updated as we continue to advance these programs to key clinical milestones next year and beyond. With that, I'll turn it over to Joe to review our financial results for the quarter.

Joe Ferra -- Chief Financial Officer

Thank you, David. As we prepare for these key developments across our pipeline next year, we continue to maintain a strong financial position. We are updating our cash guidance to reflect that we now expect our existing cash, cash equivalents and marketable securities to fund our planned operating expenses and capital requirements to the end of the second quarter of 2021. We ended the third quarter with $108.1 million in cash, cash equivalents and marketable securities compared with $99.7 million on December 31, 2018.

We recognized $0.6 million of revenue in the third quarter of 2019 compared to $0.4 million for the third quarter in 2018. Revenues in both periods were earned entirely from our collaboration with Incyte. R&D expenses were $15.9 million for the third quarter of 2019 compared to $12.9 million for the same period in 2018. This increase was primarily due to the continued advancement of our existing clinical trials and preclinical programs, including conducting IND-enabling studies to support the planned initiation of a Phase I trial for 5609 in the first quarter of 2020.

G&A expenses were $5 million for the third quarter of 2019 compared to $3.9 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 third quarter of $19.8 million or $0.47 per share compared to a net loss of $15.7 million or $0.47 per share for the same period in 2018. With that, I will turn the call over to the operator for questions.

Thank you.

Questions & Answers:


Operator

[Operator instructions] Your first question comes from the line of Kenneth Atkins with Cowen.

Kenneth Atkins -- Cowen and Company -- Analyst

Thanks for taking my questions. You showed some pretty impressive data at ASH with 1425 in terms of depth of response. Could you just remind us what are the criteria for patients achieving a molecular CR? What's the cutoff there?

Nancy Simonian -- Chief Executive Officer

Ken, I'm going to turn -- I'm going to ask David to answer that question.

David Roth -- Chief Medical Officer

Sure. Thanks for that question. The complete response requires having fewer than 5% blasts on a follow-up bone marrow biopsy associated with normalization of the neutrophils and platelets. And in order for it to be as deep as a molecular CR, mutations that were present at baseline can no longer be detected by PCR, which is the most sensitive test we have for screening the marrow.

Kenneth Atkins -- Cowen and Company -- Analyst

OK. And then what do you need to see from the ongoing cohort in frontline AML with 1465 to justify pursuing pivotal development? And then if you were to pursue that, what would that study look like, you think?

Nancy Simonian -- Chief Executive Officer

Ken, we were very pleased with the data in the newly diagnosed cohort. And as we said, we're continuing to follow the patients, particularly, to look at the durability. And at the same time, we're looking at the overall kind of landscape in the newly diagnosed unfit setting and figuring out what's the best path forward in the newly diagnosed setting. So that's an ongoing work that we're doing, really assessing the competitive landscape.

But I think importantly, these data are very strong, and we think that, that gives us a lot of conviction that this will be an important therapy also in the earlier lines of study.

Operator

Your next question comes from the line of Ted Tenthoff with Piper Jaffray.

Ted Tenthoff -- Piper Jaffray -- Analyst

On oral CDK7, what should we be anticipating as potential development path beyond the Phase I? Is this still very much in line with sort of how you were planning on developing the IV? And maybe you can comment on what potential combination therapies make sense with oral CDK7. Thanks so much.

Nancy Simonian -- Chief Executive Officer

Yes. Thanks, Ted. I'll start, then I'll turn it over to David. And I think as we've just discussed before and illustrated by what we did with 1365, we -- first of all, we're always going to be thinking about what is the optimal patient population where we think we have the greatest likelihood of seeing activity? And we've taken a lot of the learnings from both 1365 and our preclinical data with 5609, as illustrated by already doing that, enriching in this.

And then we will look at the drug and evaluate it both as a single agent. Are there potential opportunities with more of a fast-to-market opportunity as a single agent? And at the same time, we'll be thinking also of a combination because we think, ultimately, the combination is going to be most important. But we will continue always to look for opportunities. And we -- I think we were encouraged by the fact that we saw some single-agent activity with 1365.

So we think that there is that potential opportunity, but, of course, will -- the data will play out. But David, do you want to add anything?

David Roth -- Chief Medical Officer

No, I think you've largely covered it. Obviously, we're exploring single agent at the start of the program in tumor types, selected tumors, which we anticipate may be enriched for a response to the drug. And we're obviously positioned to evaluate combinations with a focus. Obviously, we have lots of preclinical data that support a range of combination opportunities to pursue, and we'll let the data guide us.

Operator

Your next question comes from the line of Jason Butler with JMP Securities.

Jason Butler -- JMP Securities -- Analyst

Hi. Thanks for taking the questions. First one, just on the 5609 Phase I study, can you just speak to any clinical site overlap with the 1365? Or anything else that gives you confidence that you can get the trial up and running quickly? And then secondly, just in context of your updated cash burn or cash runway guidance, can you just speak to how you're thinking about advancing the preclinical portfolio? And to what extent business development comes into your priorities? Thanks.

Nancy Simonian -- Chief Executive Officer

Jason, I'm going to ask David to take the first question around the sites and the overlap and potential for quick start-up.

David Roth -- Chief Medical Officer

Yes. So just -- thanks for that question to get in. Just to comment, I mean, I'm really pleased to say that our sites have been incredibly engaged, and we have excellent relationships and a good working rapport with all of the sites that we're working on the 1365 program. We don't see any concerns with respect to site overlap and operationalizing the 5609 program, and our team is very well positioned for an effective and efficient swift start-up.

So now I'll turn over the secondary question to Joe.

Nancy Simonian -- Chief Executive Officer

So I'll take the next question, Jason, related to business development. Corporate development has always been part of the strategy for the company, and we're continuing to look at what could be the right partnership that would allow us to accelerate or move forward as quickly as possible our medicines to patients. So it has always been and will continue to be an important part. And we will -- as things arise from that, we will let you know.

Jason Butler -- JMP Securities -- Analyst

Great. Thanks, Dave, for taking questions.

Operator

[Operator instructions] The next question comes from the line of Mark Breidenbach with Oppenheimer.

Mark Breidenbach -- Oppenheimer -- Analyst

Hey. Good morning guys and thanks for taking my question. Just a quick one from me, and it's probably directed toward David. I was wondering if you could give us a little bit more color on how you're defining RB pathway alterations in the CDK7 trial.

And I'm just trying to get a sense if you're planning to use a specific companion diagnostic as part of this trial or if you're really just enriching for tumor types that are already known to be enriched for RB pathway alterations. So I'm just trying to get a sense for if this will be a simple diagnostic test that will be implemented or if that's going to come in later clinical trials.

Nancy Simonian -- Chief Executive Officer

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

David Roth -- Chief Medical Officer

So we will be utilizing readily available diagnostic tests for patients as they come into the trial, and we don't anticipate there being any specific challenges associated with defining those patients. When we -- sort of closer to the time that the study starts, we can provide you with a little bit more context around specifically what we'll be looking for, though.

Nancy Simonian -- Chief Executive Officer

And just to add to what Dave was saying, we're kind of doing two things. We're both enriching for populations that have RB pathway alterations, and we'll be measuring those. We're not in those ovarian, breast and lung. We're not selecting those patients, but we will be measuring them.

And then we actually then have another cohort that's really selecting for other solid tumors that have them, but, as David said, based on existing ways to detect those that the sites have.

Mark Breidenbach -- Oppenheimer -- Analyst

That's helpful. All right. Thanks for taking the question and congrats on Project Progress.

Operator

Your next question comes from the line of Zegbeh Jallah with ROTH Capital.

Zegbeh Jallah -- ROTH Capital Partners, LLC -- Analyst

Apologies for the noise in the background, but just kind of wanted to ask a question about the cyclical program. I was very excited about the announcement, about the data coming at ASH. So I wanted to know, any thoughts about market or any other thoughts that went into making that decision? And then any additional details on the -- any incremental bit of information that you can give ahead of ASH that could kind of get people excited about the data readout?

Nancy Simonian -- Chief Executive Officer

Zegbeh, let me start, then I'm going to turn it over to Eric. We are really excited about the sickle cell program that we -- it's part of our broader strategy to identify ways to modulate the level of expression of a single gene for therapeutic benefit. And we think this could be broadly applied to many monogenic diseases, our first ones that we collected, a sickle cell, and to see the progress that's been made and to see it's highlighted at ASH is really kind of one of the really important new breakthroughs. I think it's a real testament to the work of Eric and his discovery organization.

Eric, I'm going to turn that over to you in terms of...

Eric Olson -- Chief Financial Officer -- Analyst

Yes. Thanks. Thanks for asking the question. Yes, we're really excited.

We've been working on this for a couple of years and are really building all the pieces, all the assays, all the tools to launch a drug discovery program in this space. And one of the key aspects of that was to really tear apart and understand the differentiation process and what happens to this locus as cells differentiate toward more mature erythrocytes. So that's really the highlight of the poster, is demonstrating our ability to understand this locus and assay for the types of targets that may be druggable and effective therapeutic approaches for sickle cell. So I urge you to on -- in the abstract, there are several figures that are online.

I think they really demonstrate well what we're up to.

Nancy Simonian -- Chief Executive Officer

I think just to add to what Eric said related to sickle selling, probably, we think that one can get a potential functional cure by altering the level of expression of fetal globin. And so that we can -- and we think that, therefore, taking a pill could have a benefit for a very large number of people across the globe that have this disease. So while we think that other approaches may also have benefit, we just -- we think that this approach has really the potential to have a really broad impact. And I think as illustrated by the fact that, at ASH, they selected this for their press briefing, I think it's just an indication of the potential for this approach.

Zegbeh Jallah -- ROTH Capital Partners, LLC -- Analyst

I think it's really evident that the community is supportive. And obviously, the FDA, we're looking forward to seeing new therapies for sickle cell.

Operator

I am showing no further questions at this time. I would now like to turn the conference back over to the company.

Nancy Simonian -- Chief Executive Officer

Thank you, operator. In closing, we are focused on executing on our clinical development plans for 1425 and 5609 as rapidly and efficiently as possible, and we look forward to keeping you updated as we work toward our ultimate goal of bringing much needed therapies to market for patients. Thank you all for joining us today and for continued support of Syros. Have a good day.

Operator

[Operator signoff]

Duration: 31 minutes

Call participants:

Naomi Aoki -- Head, Media Relations

Nancy Simonian -- Chief Executive Officer

David Roth -- Chief Medical Officer

Joe Ferra -- Chief Financial Officer

Kenneth Atkins -- Cowen and Company -- Analyst

Ted Tenthoff -- Piper Jaffray -- Analyst

Jason Butler -- JMP Securities -- Analyst

Mark Breidenbach -- Oppenheimer -- Analyst

Zegbeh Jallah -- ROTH Capital Partners, LLC -- Analyst

Eric Olson -- Chief Financial Officer -- Analyst

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